Exploring the Effects of Mining Activities on Welfare and the Labour Market in Peru

Arbizu Berrocal, Kevin Jesus (2025) Exploring the Effects of Mining Activities on Welfare and the Labour Market in Peru. Doctoral thesis, University of East Anglia.

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Abstract

This PhD thesis is composed of three chapters that investigate the effects of the mining sector on welfare and labour market outcomes in Peru over the period 2001–2019. The analysis is based on data from the Peruvian National Institute of Statistics and applies a quantitative research approach.

Chapter 2 explores the dynamic effects of the mining sector on welfare at the district level in Peru during the period 2001-2019. Using recent developments in the literature of difference-in-differences, I explore the heterogeneous effects of mineral production on consumption. The findings suggest consumption levels increase up to the third year after districts transition to Producing Districts (PDs). However, these consumption effects diminish thereafter suggesting that ongoing mineral production does not lead to long-term consumption improvements among PDs. These results would favour the implementation of short-term policies for periods of mini-booms during the production stages of mineral production.

Chapter 3 address the research question: To what extent do the effects of extractive industries decay in space and time? This chapter investigates the spatial and temporal diffusion of mining related welfare gains in Peru between 2001 and 2019. I assess the impact of extractive activities on welfare outcomes in both PDs and Non-Producing Districts (NPDs). Leveraging recent advances in difference-in-differences methodology, I find that districts located in close travel time proximity to active mines experience significant and positive improvements in welfare. These persist for up to five years after production begins and are also observed in neighbouring NPDs. These results offer important insights for local and regional policymakers aiming to design effective strategies around local development and migration, resource windfalls, and the spatial distribution of labour and firms.

Chapter 4 explores the effects of mining activities on the Peruvian labour market, with a focus on wages, employment, occupational structure, and informality across PDs and NPDs between 2001 and 2019. It also examines how these labour market outcomes vary across periods of mining booms and busts. Using pooled ordinary least squares and a triple-difference approach, the analysis finds that wages in PDs are strongly procyclical and significantly higher than in NPDs during boom periods. However, the share of employment is counterintuitively lower in PDs, despite a higher concentration of mining-related occupations. This suggests that mining generates a relatively narrow set of high-wage, high-skill jobs concentrated in PDs. In addition, there is evidence that certain mining-linked occupations are located in NPDs, indicating spillover effects and potentially the outsourcing of some support activities may be carried out in NPDs rather than at PDs. Informality rates have also declined more sharply in PDs than in NPDs, likely due to stronger regulatory enforcement in areas under closer institutional oversight. Together, these findings highlight that mining produces spatially concentrated labour market benefits while also generating economic interdependencies with surrounding areas. The results underscore the need for coordinated local and regional development policies that foster economic diversification and formalisation not only within PDs but also in economically linked NPDs.

Item Type:	Thesis (Doctoral)
Faculty \ School:	Faculty of Social Sciences > School of Global Development (formerly School of International Development)
Depositing User:	Chris White
Date Deposited:	09 Feb 2026 11:47
Last Modified:	09 Feb 2026 11:47
URI:	https://ueaeprints.uea.ac.uk/id/eprint/101868
DOI:

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