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On the Quest of Resource blessing : Re-examining the effect of oil on Income Inequality

Author

Listed:
  • Thierry Urbain Yogo
  • Douzounet Mallaye
  • Gaëlle Tatiana Timba

Abstract

This paper provides new insights into how oil rent affects income inequality in 52 developed and developing economies over the period 1984-2008. After taking into consideration the endogeneity aspect, the analysis yields three key findings. First, the effect of oil rent on income inequality is non-linear. Oil productivity wealth induces a decline in income inequality for countries for which the share of oil rent in percentage of GDP is below the threshold of 25%. Above this threshold, we document a positive relationship. Second, the effect of oil rent is heterogeneous across countries, depending upon the institutional quality. Specifically, we find that the decline in income inequality is lower in countries with high corruption, low accountability and weak regulatory quality. Finally, we uncover a time-dependent relationship between oil rent and income inequality. In the short run, the effect of oil rent is negative while in the long run, the opposite is observed

Suggested Citation

  • Thierry Urbain Yogo & Douzounet Mallaye & Gaëlle Tatiana Timba, 2015. "On the Quest of Resource blessing : Re-examining the effect of oil on Income Inequality," EconomiX Working Papers 2015-35, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2015-35
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    References listed on IDEAS

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    More about this item

    Keywords

    Oil rent; Inequality; institutional quality.;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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