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Escaping the resource curse: does resource dependence reduction mitigate income inequality?

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Listed:
  • Zhijiu Yang

    (Jiangnan University)

  • Mengxu Li

    (China University of Geosciences)

Abstract

This paper quantifies the impact of resource dependence reduction on income inequality. Using an exogenous shock triggered by China’s sustainable program for resource-based regions and prefecture-level data during 2004–2020, we perform a difference-in-differences estimation and find that reducing resource dependence has a sizable narrowing effect on urban-rural income gap. On average, the sustainable program reduces the gap (as measured by a ratio indicator) by 4.11%, with the effect being more pronounced in regions with initial low institutional quality. Further evidence suggests that the rise of labor-intensive industries and the increased rural investment, which benefit the poor more, help explain the narrowing effect. This paper sheds light on the sustainable development of resource-dependent regions.

Suggested Citation

  • Zhijiu Yang & Mengxu Li, 2024. "Escaping the resource curse: does resource dependence reduction mitigate income inequality?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    • Handle: RePEc:pal:palcom:v:11:y:2024:i:1:d:10.1057_s41599-024-04228-2
    DOI: 10.1057/s41599-024-04228-2
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