The Internet has been great for employment in Africa. Not only has fast Internet helped increase employment across the continent, but according to recently released study, it also decreased inequality.
The study, conducted by economists at Columbia University and Harvard University, quantifies the impact of the arrival of the submarine Internet cables that made high speed Internet accessible to millions more Africans. The researchers find that these cables, which arrived in the late 2000s and early 2010s, led to somewhere between a 4% to 10% overall rise in employment on the continent.
High speed Internet led to employment growth by encouraging the expansion of companies in information technology heavy sectors like finance, and increasing the productivity of manufacturing firms, write the researchers. Specifically, they point to thriving sectors like business process outsourcing in South Africa, e-commerce in Nigeria, and industrial production in Kenya as examples of the way high speed Internet has reshaped the African labor market.
Perhaps the most remarkable of the researchers’ findings is that the Internet has decreased inequality in employment by education level. Their data show that the group that saw the greatest increase in employment were people who had just completed primary school. Secondary school graduates and those with higher education degrees also gained, but not as much. The researchers believe this is likely due to an expansion of service industry and domestic jobs demanded by an increasingly wealthy African middle class.
In order to ascribe this job growth to the Internet, rather than other changes happening on the continent, the researchers use a clever methodology. They exploit the fact that the submarine cables arrived to coastal African cities slowly over time in a geographically determined manner. The image below, from the paper, shows the time of the arrival from 2009 to 2012.
The researchers demonstrate that, prior to the introduction of these cables, the places that would and would not receive Internet followed similar labor market trends. Because they were able to establish this similarity, the researchers were able to claim that the job growth in places that gained access to the high speed Internet was a result of access to this new resource.