Misum Working Paper Series,
Stockholm School of Economics, Mistra Center for Sustainable Markets (Misum)

Abstract: How does human capital investment respond to local economic opportunities? Income gains can increase the demand for schooling while new jobs raise the opportunity costs. We investigate this question in the context of rapid growth in artisanal gold mining in sub-Saharan Africa. We compile 45 waves of Demographic and Health Surveys covering 1.3 million individuals from 14 countries in this region. Identification comes from two sources of variation: one in the global gold price and the other in the exposure of households to places that are geologically suitable for artisanal gold mining. We find that a near-tripling of the global gold price – reflecting changes between 2005 and 2010 – leads to a decline in school attendance: by 3.1 pp for 11 to 15-year-olds and by 2.3 pp for 16 to 20-year-olds who live near gold-suitable areas. These reductions are higher for boys. Taken together, these results highlight the potential costs of economic development driven by natural resources.

Keywords: Human capital investment; Economic opportunities; Artisanal mining; Gold; Africa

JEL-codes: J24; O15; Q32

Language: English

58 pages, November 27, 2023

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