Mining and Human Capital Accumulation: the Role of the Return to Education

The literature has long tried to explain the casual relationship between natural resources booms and human capital accumulation but yet with no definitive answer. Usually the literature finds that booms abates the process of human capital accumulation by increasing the cost of opportunity of studying. We want to further contribute to this discussion by studying the impact of the mineral mining boom in Peru on the interruption of post-secondary studies during the period 2004-2016. To do so, we rely on a differences-in-difference strategy. Our results show that the Peruvian mining boom had a positive impact on the probability of interruption of post-secondary studies. Furthermore, the probability of staying idle of young individuals increased. In contrast with previous studies, we find that our results are driven mainly by a decrease in the return to higher education relative to high-school education. Other mechanisms that may be playing a minor role is the health status of young individuals -which deteriorates with the mining boom-, and the labor reallocation that occurs within households.