The Local Impact of Mining on Poverty and Inequality: Evidence from the Commodity Boom in Peru

Produced by: 
Peruvian Economic Association (PEA)
Available from: 
March 2015
Paper author(s): 
Norman Loayza (World Bank)
Jamele Rigolini (World Bank and IZA)
Agricultural - Natural Resource Economics
Macroeconomics - Economic growth - Monetary Policy

This paper studies the impact of mining activity on socioeconomic outcomes in local communities in Peru. In the last two decades, the value of Peruvian mining exports has grown by fifteen times; and since a decade ago, one-half of fiscal revenues from mining have been devolved to local governments in producing regions. Has this boom benefited people in local communities? We find evidence that producing districts have larger consumption per capita and lower poverty rates than otherwise similar districts. However, these positive impacts decrease drastically with administrative and geographic distance from mining centers. Moreover, consumption inequality within producing districts is higher than in comparable nonproducing districts. This dual effect of mining is partially accounted for by the better educated immigrants required and attracted by mining activity. The inequalizing impact of mining, both across and within districts, may explain the social discontent with mining in Peru, despite its enormous revenues.


Research section: 
Latest Research
Share this