Long-Term Consequences of Natural Resource Booms for Human Capital Accumulation (original) (raw)
Related papers
The Local Human Capital Costs of Oil Exploitation
Research Papers in Economics, 2021
This paper explores the impacts of oil exploitation on human capital accumulation at the local level in Colombia, a resource-rich developing country. We provide evidence based on detailed spatial and temporal data on oil exploitation and education, using the number of wells drilled as an intensity treatment at the school level. To find causal estimates we rely on an instrumental variable approach that exploits the exogeneity of international oil prices and a proxy of oil endowments at the local level. Our results indicate that oil has a negative impact on human capital since it reduces enrollment in higher education. Furthermore, it generates a delay in the decision to enroll in higher education and leads students to prefer technical areas of study and programs in social science, business, and law. However, we do not find any effects on quality or tertiary education completion. Our results are robust to a number of relevant specification changes and we stress the role of local marke...
and Growth in Oil-Rich Nations Conditioning the ''Resource Curse'': Globalization, Human Capital
2012
Since the 1990s it has become conventional wisdom that an abundance of natural resources, most notably oil, is very likely to become a developmental “curse.” Recent scholarship, however, has begun to call into question this apparent consensus, drawing attention to the situations in which quite the opposite result appears to hold, namely, where resources become a developmental “blessing.” Research in this vein focuses predominantly on the domestic political and economic institutions that condition the growth effects of natural resource wealth. Less attention, however, has been paid to whether or how the context of economic integration has conditioned the domestic political economy of natural resource development. This article specifically addresses this theoretical disjuncture by arguing first that the developmental consequences of oil wealth are strongly conditioned by domestic human capital resources, which, where sizeable, make possible the management of resources in ways that enc...
Natural Resource Abundance, Human Capital and Economic Growth in the Petroleum Exporting Countries
2010
Growth literatures indicate that human capital, education and technology progress are effective factors on economic growth. Empirical studies present that natural resource abundance have an important role on economic growth in natural-resource-rich countries. This paper investigates the relationship natural resource abundance, human capital and economic growth in two groups of petroleum exporting countries: namely A) Major petroleum exporters B) Other
No evidence of an oil curse: Natural resource abundance, capital formation and productivity
2019
This chapter examines the relationship between labour productivity, capital formation, and natural resource extraction in countries with natural resource reserves. We develop a theoretical two-sector model for a closed economy that maximises consumption over time, and examine how the control variables - natural resource extraction and the savings rate - determine fixed capital investment. We find that in a closed economy, the overall labour productivity is a positive function of capital investment per labour. That is in turn related to the externally given natural resource price, natural resource reserves and the resource extraction ratio. High natural resource prices and extraction rates provide opportunities to increase the overall investment in fixed capital and thus boost the labour productivity. We empirically test this model for oil as a natural resource. The data covers 36 years from 1980 to 2015 and includes 149 countries. 85 of these countries possessed commercially recover...
2001), “Natural Resource Abundance and Human Capital Accumulation
2011
This study examines indicators of human capital accumulation together with data for natural resource abundance and rents in a panel of 102 countries running from 1970 to 1999. Mineral wealth makes a positive and marked difference on human capital accumulation. Matching on observables reveals that cross-country results are not driven by a third factor such as overall economic development. Political stability does seem to affect both human capital accumulation and subsoil wealth, but not enough to overturn my conclusions. Instrumentation reveals that reverse causality running from education to natural resources does not drive the results. Estimation of a panel VAR indicates that, over the three decades, a $1 shock to resource rent generates five cents of extra educational expenditure per year. These results are consistent with Hirschman’s conjecture that enclave economies have weaker production leakages but stronger government revenue linkages than other activities. The “wealth channe...
Fueling Violence Instead of Education? The Effect of Oil Price Booms on Educational Attainment
Greater local economic activity could improve the educational attainment of children by increasing the resources available to investment in education. However, increased economic activity could also result in no gains in children's education, particularly in the expected manner. This paper studies the role of violence in explaining this paradox, with a focus on Colombia, an oil producing country with a long-standing civil conflict. Existing evidence shows that oil price booms fuel civil conflicts. This paper explores whether this increased violence undermines any positive effect higher oil resources might have on educational attainment. To assess how oil price shocks affect educational outcomes, this paper exploits exogenous increases in international oil prices and the rich geographic variation in oil production. The estimates suggest that the rise in oil prices between 1998 and 2005 had a limited effect on the number of years of schooling, and whether children are behind grade for their age. Moreover, oil price booms had small but surprising negative effects on primary school enrollment. My analysis reveals that these results might be driven by the investment of additional oil resources in social sectors other than education, and by oil price booms fueling civil conflicts. In Colombia, instead of improving education, higher oil revenues encouraged illegal right wing paramilitary groups to steal oil resources, resulting in an 8% increase in paramilitary violence in oil municipalities. The higher paramilitary violence is likely to have affected children's education, by producing stress and anxiety, forcing their families to migrate out of violent areas, and reducing the quality of education in high conflict regions.
Natural resource abundance and human capital accumulation
World Development, 2006
This study examines indicators of human capital accumulation together with data for natural resource abundance and rents in a panel of 102 countries running from 1970 to 1999. Mineral wealth makes a positive and marked difference on human capital accumulation. Matching on observables reveals that cross-country results are not driven by a third factor such as overall economic development. Political stability does seem to affect both human capital accumulation and subsoil wealth, but not enough to overturn my conclusions. Instrumentation reveals that reverse causality running from education to natural resources does not drive the results.
Crude substitution: the cyclical dynamics of oil prices and the college premium
RePEc: Research Papers in Economics, 2006
Higher oil price shocks benefit unskilled workers relative to skilled workers: Over the business cycle, energy prices and the skill premium display a strong negative correlation. This correlation is robust to different detrending procedures. We construct and estimate a model economy with energy use and heterogeneous skills and study its business cycle implications, in particular the cyclical behavior of oil prices and the skill premium. In our model economy, the skill premium and the ratio of hours worked by skilled workers to hours worked by unskilled workers are both negatively correlated with oil prices over the business cycle. For the skill premium and energy prices to move in opposite directions, the key ingredient is the larger substitutability of capital for unskilled labor than for skilled labor. The negative correlation arises even when energy and capital are fairly good substitutes.
The effect of oil prices on potential growth
2009
Oil prices have fluctuated considerably in the last few years, with major effects on the economy. This paper describes some of the mechanisms by which these fluctuations produce changes in the long-run growth of the economy. In particular, it analyses the effect on productivity, capital stock and structural unemployment. The analysis suggests that a (permanent) increase in oil prices can significantly reduce potential output. From an economic policy point of view, this effect may be more marked when competition in the product markets is low or when wage indexation is high; thus, reforms aiming to increase competition and improve wage-setting mechanisms help to reduce the negative effects of higher oil prices on long-run economic growth.
2015
Energy has long been argued as an essential factor for the development of the economy and therefore it should be brought in line with the other production factors of neoclassical economics, capital and labour. Using panel data for 130 countries from 1981 to 2009, this paper explores the impact of multiple forms of energy consumption and human capital on per capita GDP growth. Generalized method of moments is applied to estimate an augmented neoclassical growth model that includes education and health capital as well as energy consumption. The key outcomes from this study show that education and health capital have a signifficant effect on economic growth. Energy consumption is also found to support higher growth. The results on the differential effects of energy and human capital on the economic growth of the developed and oil exporting countries indicate that energy consumption has a significant positive effect in both types of countries. Education capital affects the developed cou...