Sweet child o'mine: The impact of mining on educational and labor market outputs in Colombia

This paper examines the effects of mineral extraction on human capital formation in Colombia, a country rich in natural resources but struggling with low college attendance, high youth unemployment, and high informality in the labor market. Leveraging the allocation of natural resources as a quasi-experimental setting, we link administrative data for 5.5 million secondary school graduates from 2002 to 2014 with information on legal mines in 2014 based on the distances from their respective schools. Employing Instrumental Variables and a Differences-in-Differences approach, we identify treated individuals as graduates from secondary schools located closest to operational mines at the time of their graduation. The findings indicate that active mines positively influence school cohort sizes, student academic performance, and enrollment in higher education. However, they also negatively impact entry into the formal labor market, particularly for roles associated with extractive industries. Substantial heterogeneity exists in the outcomes associated with the various extracted products, leading to the identification of distinct categories: "good mines" and "bad mines."