Aid, labour market dualism and the risk of Dutch disease in low-income countries

The research will investigate how providing overseas development assistance (ODA) to a low-income country changes the labour market (in particular skilled labour), linking this to Dutch disease and a country’s long-term growth trajectory.

The research centres on four main questions: (i) the resource movement effect: is skilled labour moving into donor-funded activities away from other formal sectors? (ii) the spending effect: is aid driving up wages in the labour market? That is, is someone with comparable qualifications, skills and experience paid the same/more/less in a donor funded vs non-donor funded position? (iii) long-term effects: what are the employment preferences of university students who will soon enter the labour market? and (iv) do the effects above vary based on the level of aid a country receives? A comparison of Liberia and Sierra Leone will be done in an effort to answer the fourth question. 

Jamelia Harris
Research Student (PRS)