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The impact of mining taxes on public education: Evidence for mining municipalities in Chile

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  • Oyarzo, Mauricio
  • Paredes, Dusan

Abstract

Chilean mining municipalities collect a mineral tax to compensate for the negative externalities associated with resource extraction. Although this implies a positive marginal impact on local finance, there is not enough empirical evidence to support that this improves the quality of life in these communities. This article attempts to bridge this knowledge gap via a unique experimental framework, specifically, the Chilean tax system and a mining law that allows certain municipalities above an exogenous threshold to keep the extra income. We use Regression Discontinuity Design to identify the causal effect on public education indicators and our results are robust and show that in the margin that the educational performance of mining municipalities is worse than that of the counterfactuals. In addition, the evidence suggests that despite the resource windfalls of the mining municipalities, it is not clear if these municipalities invest more resources in public education than other localities.

Suggested Citation

  • Oyarzo, Mauricio & Paredes, Dusan, 2021. "The impact of mining taxes on public education: Evidence for mining municipalities in Chile," Resources Policy, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:jrpoli:v:70:y:2021:i:c:s0301420717304154
    DOI: 10.1016/j.resourpol.2018.05.018
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    Cited by:

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    7. Aragón, Fernando M. & Winkler, Hernan, 2023. "The long-term impact of a resource-based fiscal windfall: Evidence from the Peruvian canon," Resources Policy, Elsevier, vol. 87(PA).

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    More about this item

    Keywords

    Public education; Mining taxes; Local governments;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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