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Watts happening to work? The labour market effects of South Africa’s electricity crisis

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  • Bhorat, Haroon
  • Köhler, Timothy

Abstract

Frequent electricity outages threaten to impede the benefits of expanded access achieved by many developing countries in recent decades. A large literature documents these negative effects, however almost none consider labour market effects. This paper merges labour force survey microdata with high-frequency electricity supply and demand data to provide the first descriptive and causal estimates of the relationships between outages and labour market outcomes in South Africa, a country characterized by frequent, severe outages referred to as load shedding. We reveal negative associations with both employment and working hours, with the former being more pronounced. Both are not evident for low outage levels but increase with outage intensity. We document significant heterogeneity across firm sizes and industries, highlighting the vulnerability of workers in small firms. Using a Difference-in-Differences design, we exploit variation induced by a unique mitigation policy in Cape Town to show that outage mitigation significantly increases both employment and working hours, but more so the former, consistent with our descriptive estimates. We do not find heterogeneous employment effects by firm size, but highlight meaningful working hours effects for workers in small firms only, again highlighting their vulnerability. No evidence of heterogeneity across industries is found, and causal effects on hourly wages or monthly earnings could not be credibly identified. Overall, this study provides evidence of the negative labour market effects of power outages in developing countries, particularly for workers in small firms, on both the extensive and intensive margins.

Suggested Citation

  • Bhorat, Haroon & Köhler, Timothy, 2025. "Watts happening to work? The labour market effects of South Africa’s electricity crisis," Energy Economics, Elsevier, vol. 142(C).
  • Handle: RePEc:eee:eneeco:v:142:y:2025:i:c:s0140988324008284
    DOI: 10.1016/j.eneco.2024.108119
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    References listed on IDEAS

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    1. Timothy Köhler & Haroon Bhorat & Robert Hill, 2023. "The effect of wage subsidies on job retention in a developing country: Evidence from South Africa," WIDER Working Paper Series wp-2023-114, World Institute for Development Economic Research (UNU-WIDER).
    2. Meles, Tensay Hadush, 2020. "Impact of power outages on households in developing countries: Evidence from Ethiopia," Energy Economics, Elsevier, vol. 91(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Power outages; Labour market; Developing country; South Africa; Load shedding;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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