be used in the event of a blackout. Recall as well that all firms have access to the simplest production technology: sewing by hand using a needle and thread. This paper finds no evidence of changes in capital composition in response to outages,<sup>20</sup> but supposes rather naturally that firms of both types shift, at least partially, to (existing) functional manual production technologies when blackouts render electric sewing machines obsolete. Though this study is limited in its ability to directly describe differential changes in production processes in firms with workers, it shows that these firms are able to more flexibly shift labor inputs to cope with outages. As seen in Table 4, paired days with any blackout are associated with additional worker hours relative to paired days with lights. Firms owners in firms with workers also significantly increase their own hours on days with electricity following a blackout day, suggestive evidence of potentially complex dynamic shifts in production processes and in the matching between capital inputs and labor inputs in firms with workers.

# **6 Conclusion**

Unreliable power supplies are a well-known obstacle to doing business across much of the developing world, yet surprisingly little is known about how frequent blackouts affect firms of different sizes, or workers of different skill levels. Previous analyses have focused on larger firms and capital-based coping strategies, uncovering interesting patterns using annual data, but leaving a space in the literature to explore how outages impact microenterprises which comprise the overwhelming majority of firms in lowincome countries and are a vital source of employment and income for poor and vulnerable households. This study begins to fill that gap by using high-frequency blackout, profit, and labor input data to estimate the effects of blackouts on microenterprises.

The analysis finds that single-person firms experience large reductions in revenues and profits, but fails to reject no effect of outages on the revenues and profits of firms with employees. Turning to laborbased coping strategies, the study documents that one-person firm owners reduce their labor supply in response to outages. Firms with employees adjust labor in several ways, increasing worker labor hours on blackout days, increasing firm owner labor hours on days on which lights are restored, and decreasing dramatically total wages paid. Leveraging descriptive evidence on the composition of the workforce in the garment making industry in Ghana, this paper argues that firms employing unskilled workers drive the observed increases in worker labor hours while firms employing skilled workers drive the observed decreases in wages paid.

Taken together, these findings suggest that the economic costs of blackouts fall most heavily on singleperson firm owners, who experience large reductions in their effective wage, and on skilled workers, who

> experience large reductions in earnings. More detailed analysis of the distributional consequences of

> 20Appendix Table 8 estimates changes in capital from June 2014 to June 2015 using the retrospective follow-up data and fails to reject no effect on capital or capital composition. Point estimates are very near zero for both one-person firms and with workers.

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