Effect of dependence on natural resources on employment quality: Insights from African countries

Abstract

This study evaluates the effect of natural resource dependence on employment quality in Africa, analysing data from 2002 to 2020. Our findings indicate that resource dependence is positively and significantly linked to poor employment quality. Specifically, a one-percentage-point increase in resource rent dependence results in a 0.026-percentage-point rise in vulnerable employment and a 0.282-percentage-point increase in working poverty rates. However, this effect of resource rents on employment quality occurs only when institutional quality is low. Once institutional quality surpasses a certain threshold, this adverse effect is reversed. These results highlight the need for policies that diversify economic structures to reduce African economies' overreliance on natural resource rents and enhance institutional quality.