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On the Quest of Resource blessing: Re-examining the effect of oil on Income Inequality

Author

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  • Urbain Thierry Yogo

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

  • Douzounet Mallaye
  • Gaëlle Tatiana Timba

Abstract

This paper provides new insights into how oil rent affects income inequality in 52 developed and developing economies over the period 1984-2008. After taking into consideration the endogeneity aspect, the analysis yields three key findings. First, the effect of oil rent on income inequality is non-linear. Oil productivity wealth induces a decline in income inequality for countries for which the share of oil rent in percentage of GDP is below the threshold of 25%. Above this threshold, we document a positive relationship. Second, the effect of oil rent is heterogeneous across countries, depending upon the institutional quality. Specifically, we find that the decline in income inequality is lower in countries with high corruption, low accountability and weak regulatory quality. Finally, we uncover a time-dependent relationship between oil rent and income inequality. In the short run, the effect of oil rent is negative while in the long run, the opposite is observed.

Suggested Citation

  • Urbain Thierry Yogo & Douzounet Mallaye & Gaëlle Tatiana Timba, 2015. "On the Quest of Resource blessing: Re-examining the effect of oil on Income Inequality," Working Papers hal-04141418, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141418
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141418v1
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    References listed on IDEAS

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    1. Vicente, Pedro C., 2010. "Does oil corrupt? Evidence from a natural experiment in West Africa," Journal of Development Economics, Elsevier, vol. 92(1), pages 28-38, May.
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    3. Michael T. Owyang & Valerie A. Ramey & Sarah Zubairy, 2013. "Are Government Spending Multipliers Greater During Periods of Slack? Evidence from 20th Century Historical Data," NBER Working Papers 18769, National Bureau of Economic Research, Inc.
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