Paper Talk: Electricity and Employment

I interviewed Professor Taryn Dinkelman about her research for a set of display cases I put up this past spring, and didn’t even think to include it here! This post is about her paper on rural electrification and employment in South Africa – a very cool IV approach.

The Effects of Rural Electrification on Employment: New Evidence from South Africa

Professor Dinkelman is from South Africa, and she was familiar with an electrification initiative that was taking place there. In true economist fashion, she investigated the factors that affected the dissemination of electricity and found one that was unrelated to confounding factors: land gradient.

My first concern was that land gradient WOULD be related to other characteristics (such as land arability and similar traits), but she had investigated the fact that the population did not do farming, so land gradient had no effect on them. It simply had an effect on the ease with which electric wires could be erected. Enter, an instrumental variable!

Professor Dinkelman used land gradient as an instrumental variable for access to electricity, and found that female employment increased significantly in the five years after electrification. Female wages went down, while male wages went up, and both men and women worked increased hours. These results make sense, as more females can enter the workforce and compete for wages, and both genders can make use of more hours out of the day to perform work. A little bit of digging into the inner workings of an electrification company led to a cool instrumental variable, analysis and subsequent paper!

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