Industrial versus artisanal mining: The effects on local employment in Liberia

Abstract

Using novel quantitative and qualitative data on industrial, semi-industrial, and artisanal mining, this paper analyzes the impact of different mining types on local structural change, measured by shifts in employment from agriculture to more productive sectors. The econometric strategy exploits the temporal variation in mine openings and closings and the spatial variation in mine locations in a difference-in-difference analysis. Primary data collected through qualitative interviews at mining sites explains the mechanisms behind the econometric results. The findings provide the first causal evidence on employment effects of a boom-and-bust cycle of artisanal mining. A boom seems to shift employment from agriculture to more productive sectors and a bust decreases the likelihood for individuals to work. The opening of industrial gold mines seems to decrease employment in more productive sectors and increase employment in agriculture, while industrial iron ore mines have no effect. This paper shows that benefits of mining for the local population depend on the type of mining, the commodities mined, and the local boom-bust cycle of mining.