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Watts Happening to Work? The Labour Market Effects of South Africa’s Electricity Crisis

Author

Listed:
  • Haroon Bhorat
  • Timothy Köhler

    (Development Policy Research Unit, University of Cape Town)

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 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. Exploiting temporal variation in outage incidence and intensity, we find that load shedding is associated with significantly lower employment rates, working hours, and earnings on average. Employment appears more sensitive relative to intensive margin outcomes, threatening job creation and preservation efforts in an already jobs scarce economy. These negative relationships, however, are not evident for low levels of load shedding, but their strength markedly increases with load shedding intensity. We document further heterogeneity by firm size and industry, highlighting the vulnerability of jobs in manufacturing. Overall, our findings suggest that the South African labour market is largely insensitive to relatively low levels of load shedding; however, high levels appear especially costly.

Suggested Citation

  • Haroon Bhorat & Timothy Köhler, 2024. "Watts Happening to Work? The Labour Market Effects of South Africa’s Electricity Crisis," Working Papers 202401, University of Cape Town, Development Policy Research Unit.
  • Handle: RePEc:ctw:wpaper:202401
    as

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    File URL: https://commerce.uct.ac.za/sites/default/files/media/documents/commerce_uct_ac_za/1093/DPRU%20WP202401.pdf
    File Function: First version, 2024
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    More about this item

    Keywords

    electricity 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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