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Natural Rerources and public Sector Wages

Author

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  • Pernille Parmer

    (Department of Economics, Norwegian University of Science and Technology)

Abstract

This paper studies the effects of natural resource abundance on wages for local public sector leaders in Norway. Local governments with high public revenues from the hydropower sector have fewer economic constraints compared with other local governments. High revenues might make it easier for public sector leaders to use their political power to increase leader wages relative to the wages received by other working groups. Novel data on local public sector wages, in combination with an exogenous instrument for hydropower revenues, lead to a unique empirical framework for this analysis. The instrumental variable estimates exploit the variation in geographical and topological characteristics, such as the length of rivers, river slope, water ow volume, and precipitation. Although the results indicate that public sector wages are positively a ected by local government revenues, there is no evidence that the revenue effect is stronger for leader wages than for the wages of other working groups.

Suggested Citation

  • Pernille Parmer, 2014. "Natural Rerources and public Sector Wages," Working Paper Series 16114, Department of Economics, Norwegian University of Science and Technology.
    • Handle: RePEc:nst:samfok:16114
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    File URL: http://www.svt.ntnu.no/iso/WP/2014/Parmer_2014wp2.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Public sector wages; resource curse; rent-seeking; identification; local governments; political economy;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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