Gold Mining and Proto-Urbanization

Central place theory predicts that
agglomeration can arise from external shocks. This paper
investigates whether gold mining is a catalyst for
proto-urbanization in rural Ghana. Using cross-sectional
data, the analysis finds that locations within 10 kilometers
from gold mines have more night light and proportionally
higher employment in industry and services and in the wage
sector. Non-farm employment decreases at 20–30 kilometers
distance to gold mines. These findings are consistent with
agglomeration effects that induce non-farm activities to
coalesce in one particular location. This paper finds that,
over time, an increase in gold production is associated with
more wage employment and apprenticeship, and fewer people
employed in private informal enterprises. It also finds that
the changes arising from increasing gold production are not
reversed when large gold mines shrink. However this pattern
cannot be ascribed unambiguously to agglomeration effects,
given an increase in informal mining after formal mines
decrease output is also observed.