Lithium Boom and Local Inequalities

Is the commodity boom associated with global green transitions facilitating or hindering local development in resource-rich countries in the Global South? This paper empirically studies the distributive consequences of the lithium boom in Argentina. The results show that the lithium boom exacerbates inequality within and across the lithium-producing provinces (LPPs). The higher intra-community inequality is primarily driven by the transfer channel. Following the lithium price shock, transfer payments to individuals employed in the extractive sector grew 36 per cent faster than those received by their peers. Compared with other regions in the country, the LPPs experience significant salary and transfer effects from the boom, estimated at 21 per cent and 13 per cent, respectively, thereby contributing to greater inter-community inequality. In contrast, labour market heterogeneities, such as immigration and education, do not appear to be primary contributors to the rising levels of inequality.