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The Value of Redistribution: Natural Resources and the Formation of Human Capital under Weak Institutions

Listed author(s):
  • Agüero, Jorge M.

    ()

    (University of Connecticut)

  • Balcázar, Carlos Felipe

    ()

    (World Bank)

  • Maldonado, Stanislao

    ()

    (Universidad del Rosario)

  • Nopo, Hugo R.

    ()

    (GRADE)

We exploit time and spatial variation generated by the commodities boom to measure the effect of natural resources on human capital formation in Peru, a country with low governance indicators. Combining test scores from over two million students and district-level administrative data on mining production and the redistribution of mining taxes to local governments, we find no effect from production. However, redistribution of mining taxes increases math test scores by 0.23 standard deviations. We identify the improvements in the quality of teachers and in school infrastructure, together with increases in adult employment and health outcomes of adults and children, as key mechanisms from the redistribution. Policy implications for the avoidance of the natural resource curse are discussed.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10884.

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Length: 47 pages
Date of creation: Jul 2017
Handle: RePEc:iza:izadps:dp10884
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  1. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
  2. Fernando M. Arag?n & Juan Pablo Rud, 2013. "Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 1-25, May.
  3. Thorvaldur Gylfason & Gylfi Zoega, 2006. "Natural Resources and Economic Growth: The Role of Investment," The World Economy, Wiley Blackwell, vol. 29(8), pages 1091-1115, August.
  4. Joshua D. Angrist & Adriana D. Kugler, 2008. "Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 191-215, May.
  5. Gustavo Canavire-Bacarreza & Jorge Martinez-Vazquez & Cristian Sepúlveda, 2012. "Sub-national Revenue Mobilization in Peru," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1209, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  6. Loayza, Norman & Rigolini, Jamele, 2016. "The Local Impact of Mining on Poverty and Inequality: Evidence from the Commodity Boom in Peru," World Development, Elsevier, vol. 84(C), pages 219-234.
  7. Claudio Ferraz & Frederico Finan & Diana Belo Moreira, 2009. "Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil," Textos para discussão 562, Department of Economics PUC-Rio (Brazil).
  8. Duflo, Esther & Dupas, Pascaline & Kremer, Michael, 2015. "School governance, teacher incentives, and pupil–teacher ratios: Experimental evidence from Kenyan primary schools," Journal of Public Economics, Elsevier, vol. 123(C), pages 92-110.
  9. Hanushek, Eric A., 2006. "School Resources," Handbook of the Economics of Education, Elsevier.
  10. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
  11. Melissa Dell, 2010. "The Persistent Effects of Peru's Mining Mita," Econometrica, Econometric Society, vol. 78(6), pages 1863-1903, November.
  12. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2006. "Political foundations of the resource curse," Journal of Development Economics, Elsevier, vol. 79(2), pages 447-468, April.
  13. Petra E. Todd & Kenneth I. Wolpin, 2003. "On The Specification and Estimation of The Production Function for Cognitive Achievement," Economic Journal, Royal Economic Society, vol. 113(485), pages 3-33, February.
  14. Francesco Caselli & Andrea Tesei, 2016. "Resource Windfalls, Political Regimes, and Political Stability," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 573-590, July.
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  16. Glewwe, Paul & Kremer, Michael, 2006. "Schools, Teachers, and Education Outcomes in Developing Countries," Handbook of the Economics of Education, Elsevier.
  17. Francesco Caselli & Tom Cunningham, 2009. "Leader behaviour and the natural resource curse," Oxford Economic Papers, Oxford University Press, vol. 61(4), pages 628-650, October.
  18. Cristian Pop-Eleches & Miguel Urquiola, 2013. "Going to a Better School: Effects and Behavioral Responses," American Economic Review, American Economic Association, vol. 103(4), pages 1289-1324, June.
  19. Omar Zambrano & Marcos Robles & Denisse Laos, 2014. "Global boom, local impacts: Mining revenues and subnational outcomes in Peru 2007-2011," IDB Publications (Working Papers) 85133, Inter-American Development Bank.
  20. Stephan Litschig & Kevin M. Morrison, 2013. "The Impact of Intergovernmental Transfers on Education Outcomes and Poverty Reduction," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 206-240, October.
  21. Deacon, Robert T., 2011. "The Political Economy of the Natural Resource Curse: A Survey of Theory and Evidence," Foundations and Trends(R) in Microeconomics, now publishers, vol. 7(2), pages 111-208, December.
  22. Martin Ardanaz & Stanislao Maldonado, 2016. "Natural Resource Windfalls and Efficiency of Local Government Expenditures: Evidence from Peru," DOCUMENTOS DE TRABAJO 014578, UNIVERSIDAD DEL ROSARIO.
  23. Javier Arellano-Yanguas, 2011. "Aggravating the Resource Curse: Decentralisation, Mining and Conflict in Peru," Journal of Development Studies, Taylor & Francis Journals, vol. 47(4), pages 617-638.
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