New DPRU working paper: "Watts happening to work? The labour market effects of South Africa´s electricity crisis"

Authored by Haroon Bhorat and Timothy Köhler, DPRU Working Paper 202401 considers the labour market effects of ongoing power outages (loadshedding) in South Africa.

This study contributes to this relatively sparse literature in the context of South Africa, a middle-income country characterized by extreme unemployment and systemic power supply issues referred to as load shedding, which have increased in incidence and intensity in recent years. The authors merge labour force survey data with macroeconomic data and high-frequency electricity production and consumption data from 2008 to 2023 and exploit temporal variation in the incidence and intensity of outages to estimate average and heterogenous associations with employment, working hours, hourly wages, and monthly earnings.

Making use of multiple measures of load shedding, the authors analyse four outcomes in particular on both the extensive and intensive margins: employment, working hours, hourly wages, and monthly earnings. They estimate associations on average and additionally consider heterogeneity by outage intensity, firm size, and industry. Their results show that there is a significant, negative relationship between these outages and employment, working hours, and monthly earnings. A null association with hourly wages suggests the monthly earning reductions are driven by working hour reductions. All these associations are, however, not evident for low levels of load shedding but tend to significantly increase with load shedding intensity.

This study was supported by the United Nations University – World Institute for Development Economics Research (UNU-WIDER) as part of the Southern Africa - Towards Inclusive Economic Development (SA-TIED) programme. This study is reproduced here from the original WIDER working paper 2024/20 and SATIED working paper 227 with full acknowledgement of UNU-WIDER, Helsinki.

Read the paper in full here: