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

Author

Listed:
  • Agüero, Jorge M.

    () (University of Connecticut)

  • Balcázar, Carlos Felipe

    () (World Bank)

  • Maldonado, Stanislao

    () (Universidad del Rosario)

  • Nopo, Hugo R.

    () (GRADE)

Abstract

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.

Suggested Citation

  • Agüero, Jorge M. & Balcázar, Carlos Felipe & Maldonado, Stanislao & Nopo, Hugo R., 2017. "The Value of Redistribution: Natural Resources and the Formation of Human Capital under Weak Institutions," IZA Discussion Papers 10884, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10884
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    More about this item

    Keywords

    resource booms; academic achievement; intergovernmental transfers;

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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