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Oil Dependency and Quality of Education: New Empirical Evidence

Author

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  • Mohammad Reza Farzanegan

    (Philipps-Universität Marburg)

  • Marcel Thum

    (TU Dresden)

Abstract

The resource curse hypothesis suggests that resource-rich countries (especially oil dependent economies) show lower economic growth rates compared to resource-poor countries. We add to this literature by providing empirical evidence on a new transmission channel of the resource curse, namely, the negative long-run effect of oil rents on the quality of education. Our empirical analysis for more than 70 countries in the period of 1995-2015 shows a significantly positive effect of oil rents on the quantity of education measured by government spending on primary and secondary education. However, we find a robust and negative long-run effect of oil rents dependency on the objective and subjective indicators of quality of education, controlling for a set of other drivers of education quality and regional dummies. The significant negative effect of oil rents dependency on education quality can be explained by both the demand (e.g., skill acquisition) and supply (e.g., teacher quality) side channels.

Suggested Citation

  • Mohammad Reza Farzanegan & Marcel Thum, 2017. "Oil Dependency and Quality of Education: New Empirical Evidence," MAGKS Papers on Economics 201745, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:201745
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    Cited by:

    1. Maurer, Stephan E., 2018. "Oil discoveries and education spending in the postbellum south," LSE Research Online Documents on Economics 88677, London School of Economics and Political Science, LSE Library.
    2. Maurer, Stephan E., 2019. "Oil discoveries and education provision in the Postbellum South," Economics of Education Review, Elsevier, vol. 73(C).
    3. Amir Mousavi & Jeremy Clark, 2021. "The effects of natural resources on human capital accumulation: A literature survey," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1073-1117, September.
    4. Mohammad Reza Farzanegan & Tim Krieger, 2018. "Oil Rents Shocks and Inequality in Iran," CESifo Working Paper Series 6876, CESifo.
    5. Mohammad Reza Farzanegan & Pooya Alaedini & Khayyam Azizimehr, 2017. "Middle Class in Iran: Oil Rents, Modernization, and Political Development," MAGKS Papers on Economics 201756, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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