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Oil, governance and the (mis)allocation of talent in developing countries

Author

Listed:
  • Christian Hubert Ebeke

    (International Monetary Fund (IMF))

  • Luc Désiré Omgba

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Rachid Laajaj

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper sheds light on the relationship between oil rent and the allocation of talent, toward rent-seeking versus more productive activities, conditional on the quality of institutions. Using a sample of 69 developing countries, we demonstrate that oil resources orient university students toward specializations that provide better future access to rents when institutions are weak. The results are robust to various specifications, datasets on governance quality and estimation methods. Oil affects the demand for each profession through a technological effect, indicating complementarity between oil and engineering, manufacturing and construction; however, it also increases the ‘size of the cake'. Therefore, when institutions are weak, oil increases the incentive to opt for professions with better access to rents (law, business, and the social sciences), rather than careers in engineering, creating a deviation from the optimal allocation between the two types of specialization.

Suggested Citation

  • Christian Hubert Ebeke & Luc Désiré Omgba & Rachid Laajaj, 2015. "Oil, governance and the (mis)allocation of talent in developing countries," Post-Print halshs-01112661, HAL.
    • Handle: RePEc:hal:journl:halshs-01112661
    DOI: 10.1016/j.jdeveco.2014.12.004
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