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Income inequality and the oil resource curse

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  • Parcero, Osiris J.
  • Papyrakis, Elissaios

Abstract

Surprisingly, there has been little research conducted about the cross-country relationship between oil dependence/abundance and income inequality. At the same time, there is some tentative evidence suggesting that oil rich nations tend to under-report data on income inequality, which can potentially influence the estimated empirical relationships between oil richness and income inequality. In this paper we contribute to the literature in a twofold manner. First, we explore in depth the empirical relationship between oil and income inequality by making use of the Standardized World Income Inequality Database – the most comprehensive dataset on income inequality providing comparable data for the broadest set of country-year observations. Second, this is the first study to our knowledge that adopts an empirical framework to examine whether oil rich nations tend to under-report data on income inequality and the possible implications thereof. We make use of Heckman selection models to validate the tendency of oil rich countries to under-report and correct for the bias that might arise as a result of this – we find that oil is associated with lower income inequality with the exception of the very oil-rich economies.

Suggested Citation

  • Parcero, Osiris J. & Papyrakis, Elissaios, 2016. "Income inequality and the oil resource curse," Resource and Energy Economics, Elsevier, vol. 45(C), pages 159-177.
  • Handle: RePEc:eee:resene:v:45:y:2016:i:c:p:159-177
    DOI: 10.1016/j.reseneeco.2016.06.001
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    Cited by:

    1. Christopoulos, Dimitris & McAdam, Peter, 2017. "Do financial reforms help stabilize inequality?," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 45-61.
    2. Astghik Mavisakalyan & Yashar Tarverdi, 2017. "Oil and Women: A Re-examination," Bankwest Curtin Economics Centre Working Paper series WP1706, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    3. repec:spr:minecn:v:31:y:2018:i:1:d:10.1007_s13563-018-0153-z is not listed on IDEAS

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    Keywords

    Income inequality; Oil; Resource curse;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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