IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp14004.html
   My bibliography  Save this paper

We Don't Need No Education: The Effect of Natural Resource Income Shocks on Human Capital

Author

Listed:
  • Gradstein, Mark

    (Ben Gurion University)

  • Ishak, Phoebe W.

    (World Bank)

Abstract

We explore the effects of persistent income shocks on human capital using oil price fluctuations in a large sample of relevant African countries and employing micro data from multiple waves of the Demographic and Health Survey (DHS). Theoretically, such shocks enable human capital investment via the standard income effect; but also crowd it out because of substitutability between natural resource and human capital income sources - so the net outcome can go either way. Our model also suggests that the relative strength of the two effects depends on the age at which the shock is experienced and the affected gender. Consistent with these insights, we find that income shocks in early life enhance educational attainment and other derived outcomes; but reduce them if experienced in adolescence, especially for females. These results survive multiple robustness checks, and their broader implications are discussed.

Suggested Citation

  • Gradstein, Mark & Ishak, Phoebe W., 2020. "We Don't Need No Education: The Effect of Natural Resource Income Shocks on Human Capital," IZA Discussion Papers 14004, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14004
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp14004.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    2. Osili, Una Okonkwo & Long, Bridget Terry, 2008. "Does female schooling reduce fertility? Evidence from Nigeria," Journal of Development Economics, Elsevier, vol. 87(1), pages 57-75, August.
    3. Sharon Maccini & Dean Yang, 2009. "Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall," American Economic Review, American Economic Association, vol. 99(3), pages 1006-1026, June.
    4. Tiago Cavalcanti & Daniel Mata & Frederik Toscani, 2019. "Winning the oil lottery: the impact of natural resource extraction on growth," Journal of Economic Growth, Springer, vol. 24(1), pages 79-115, March.
    5. Douglas Almond & Janet Currie & Valentina Duque, 2018. "Childhood Circumstances and Adult Outcomes: Act II," Journal of Economic Literature, American Economic Association, vol. 56(4), pages 1360-1446, December.
    6. Manisha Shah & Bryce Millett Steinberg, 2017. "Drought of Opportunities: Contemporaneous and Long-Term Impacts of Rainfall Shocks on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 527-561.
    7. Havranek, Tomas & Horvath, Roman & Zeynalov, Ayaz, 2016. "Natural Resources and Economic Growth: A Meta-Analysis," World Development, Elsevier, vol. 88(C), pages 134-151.
    8. Pelle Ahlerup & Thushyanthan Baskaran & Arne Bigsten, 2020. "Gold Mining and Education: A Long-run Resource Curse in Africa?," Journal of Development Studies, Taylor & Francis Journals, vol. 56(9), pages 1745-1762, July.
    9. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    10. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
    11. Auty, Richard M., 1994. "Industrial policy reform in six large newly industrializing countries: The resource curse thesis," World Development, Elsevier, vol. 22(1), pages 11-26, January.
    12. Stijns, Jean-Philippe, 2006. "Natural resource abundance and human capital accumulation," World Development, Elsevier, vol. 34(6), pages 1060-1083, June.
    13. Fernando M. Arag?n & Juan Pablo Rud, 2013. "Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 1-25, May.
    14. Badeeb, Ramez Abubakr & Lean, Hooi Hooi & Clark, Jeremy, 2017. "The evolution of the natural resource curse thesis: A critical literature survey," Resources Policy, Elsevier, vol. 51(C), pages 123-134.
    15. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
    16. Achyuta Adhvaryu & James Fenske & Anant Nyshadham, 2019. "Early Life Circumstance and Adult Mental Health," Journal of Political Economy, University of Chicago Press, vol. 127(4), pages 1516-1549.
    17. James Fenske & Igor Zurimendi, 2017. "Oil and ethnic inequality in Nigeria," Journal of Economic Growth, Springer, vol. 22(4), pages 397-420, December.
    18. Alderman, Harold & King, Elizabeth M., 1998. "Gender differences in parental investment in education," Structural Change and Economic Dynamics, Elsevier, vol. 9(4), pages 453-468, December.
    19. Almond, Douglas & Currie, Janet, 2011. "Human Capital Development before Age Five," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 15, pages 1315-1486, Elsevier.
    20. Kaul, Tara, 2018. "Intra-household allocation of educational expenses: Gender discrimination and investing in the future," World Development, Elsevier, vol. 104(C), pages 336-343.
    21. Chang-Tai Hsieh, 2003. "Do Consumers React to Anticipated Income Changes? Evidence from the Alaska Permanent Fund," American Economic Review, American Economic Association, vol. 93(1), pages 397-405, March.
    22. Gradstein, Mark & Klemp, Marc, 2020. "Natural resource access and local economic growth," European Economic Review, Elsevier, vol. 127(C).
    23. repec:ucp:bknber:9780226740867 is not listed on IDEAS
    24. Kingdon, Geeta Gandhi, 2005. "Where Has All the Bias Gone? Detecting Gender Bias in the Intrahousehold Allocation of Educational Expenditure," Economic Development and Cultural Change, University of Chicago Press, vol. 53(2), pages 409-451, January.
    25. Siwan Anderson, 2007. "The Economics of Dowry and Brideprice," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 151-174, Fall.
    26. Papyrakis, Elissaios & Gerlagh, Reyer, 2004. "The resource curse hypothesis and its transmission channels," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 181-193, March.
    27. Victor Lavy & Analia Schlosser & Adi Shany, 2016. "Out of Africa: Human Capital Consequences of In Utero Conditions," NBER Working Papers 21894, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aamer Abu‐Qarn & Shirlee Lichtman‐Sadot, 2022. "The Trade‐Off Between Work and Education: Evidence from Public Transportation Penetration to Arab Towns in Israel," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(1), pages 193-225, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ishak, Phoebe W. & Gradstein, Mark, 2021. "We Don't Need No Education: The Effect of Persistent Income Shocks on Human Capital," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242368, Verein für Socialpolitik / German Economic Association.
    2. Mark Gradstein & Phoebe W. Ishak, 2024. "We Don't Need No Education: The Effect of Income Shocks on Human Capital in Africa," Working Papers 2405, Ben-Gurion University of the Negev, Department of Economics.
    3. Zuo, Na & Zhong, Hua, 2020. "Can resource policy reverse the resource curse? Evidence from China," Resources Policy, Elsevier, vol. 68(C).
    4. Shoji, Masahiro, 2020. "Early-Life Circumstances and Adult Locus of Control: Evidence from 46 Developing Countries," MPRA Paper 99987, University Library of Munich, Germany.
    5. Richard Akresh & Sonia Bhalotra & Marinella Leone & Una Osili, 2023. "First- and Second-Generation Impacts of the Biafran War," Journal of Human Resources, University of Wisconsin Press, vol. 58(2), pages 488-531.
    6. Zuo, Na & Zhong, Hua, 2019. "The Effect of Resource Wealth on Regional Economic Development in China," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 291114, Agricultural and Applied Economics Association.
    7. Leonardo Bonilla-Mejía, 2019. "Illegal Mining and Human Capital Accumulation: Evidence from the Colombian Gold Rush," Documentos de trabajo sobre Economía Regional y Urbana 280, Banco de la Republica de Colombia.
    8. Vasilyeva, Olga & Libman, Alexander, 2020. "Varieties of authoritarianism matter: Elite fragmentation, natural resources and economic growth," European Journal of Political Economy, Elsevier, vol. 63(C).
    9. Tushar Bharati & Seungwoo Chin & Dawoon Jung, 2020. "Recovery from an Early-Life Shock through Improved Access to Schools," Economics Discussion / Working Papers 20-04, The University of Western Australia, Department of Economics.
    10. Hilmawan, Rian & Clark, Jeremy, 2019. "An investigation of the resource curse in Indonesia," Resources Policy, Elsevier, vol. 64(C).
    11. Bonilla Mejía, Leonardo, 2020. "Mining and human capital accumulation: Evidence from the Colombian gold rush," Journal of Development Economics, Elsevier, vol. 145(C).
    12. Tushar Bharati & Thea Harpley Green, 2021. "Age at school transition and children’s cognitive and non-cognitive outcomes," Economics Discussion / Working Papers 21-06, The University of Western Australia, Department of Economics.
    13. Felipe de S Tavares & Alexandre Almeida & Fernando Postali, 2021. "Does Oil Dependence Affect Regional Wealth? A Regional Study for the Municipalities of the State of Rio de Janeiro," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 381-391.
    14. Richard Akresh & Sonia Bhalotra & Marinella Leone & Una Osili, 2017. "Hunger Games: First and Second Generation Impacts of the Biafran War," HiCN Working Papers 254, Households in Conflict Network.
    15. Pérez, Claudia & Claveria, Oscar, 2020. "Natural resources and human development: Evidence from mineral-dependent African countries using exploratory graphical analysis," Resources Policy, Elsevier, vol. 65(C).
    16. Konte, Maty & Vincent, Rose Camille, 2021. "Mining and quality of public services: The role of local governance and decentralization," World Development, Elsevier, vol. 140(C).
    17. James Fenske & Igor Zurimendi, 2017. "Oil and ethnic inequality in Nigeria," Journal of Economic Growth, Springer, vol. 22(4), pages 397-420, December.
    18. Tadadjeu, Sosson & Njangang, Henri & Ningaye, Paul & Nourou, Mohammadou, 2020. "Linking natural resource dependence and access to water and sanitation in African countries," Resources Policy, Elsevier, vol. 69(C).
    19. Deng, Zichen & Lindeboom, Maarten, 2022. "A bit of salt, a trace of life: Gender norms and the impact of a salt iodization program on human capital formation of school aged children," Journal of Health Economics, Elsevier, vol. 83(C).
    20. Achyuta Adhvaryu & Teresa Molina & Anant Nyshadham & Jorge Tamayo, 2024. "Helping Children Catch Up: Early Life Shocks and the PROGRESA Experiment," The Economic Journal, Royal Economic Society, vol. 134(657), pages 1-22.

    More about this item

    Keywords

    natural resources; income shocks; human capital;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • I2 - Health, Education, and Welfare - - Education

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp14004. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.