Chinese Aid and Local Employment in Africa

We study the impact of Chinese infrastructure aid projects on local employment in Africa. We use spatial and temporal variations in Chinese projects and different waves of household surveys in 10 African countries during the period 2000–14 to identify the change in individual employment after the arrival of Chinese projects, based on a difference-in-differences type of estimation. We find that the impact is mostly short-term during project constructions. Local employment is increased significantly by two to three percentage points mostly within the first two years after Chinese projects start. This effect diminishes after the third year. Chinese aid has created job opportunities for local residents both directly and indirectly through relevant sectors, as more employment is observed for manual labor, professional, technical, and managerial positions, and also in the service sector. More year-round and cash-earning jobs are created. The different types of infrastructures all increase short-term employment significantly, while the construction of schools, hospitals, and water and power facilities benefits local employment greatly also in the longer term. We address the potential confounds from other developmental resources in various ways.