Understanding the Transitional Costs of Coal Workers : Evidence from South Africa - Technical Working Brief

Overview & Synopsis

For workers moving from coal-related employment to non-coal sectors, one-time friction costs associated with making the transition can amount to 0.70-4.59 years of average annual South African wages for coal mine workers and 0.12-3.74 years for electricity-sector workers. Once in non-coal sectors, these workers can also face annual wage losses of 29-57 percent and 37-61 percent, respectively, in the absence of transition support. These estimates do not account for sectoral amenity values, such as differences in occupational health risks and working conditions, which may offset some of the welfare losses implied by wage differences alone. Together, the estimates quantify barriers to worker reallocation that transition-support programs, including CIF ACT, are designed to address by easing mobility frictions and supporting workers through the transition.