Natural resources and income inequality in developed countries: synthetic control method evidence

Hartwell, Christopher A.; Horváth, Roman; Horváthová, Eva; Popova, Olga

doi:10.1007/s00181-021-02023-5

Cited by 25 publications

(15 citation statements)

References 79 publications

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“…This suggests that higher natural resource rents lead to a more equal distribution of income. This result is consistent with the work of Hartwell et al (2022) who show that natural resource discovery reduces income inequality. In column 4, the effect of natural resource rents becomes statistically insignificant.…”

Section: Resultssupporting

confidence: 92%

“…To achieve this objective, the present study uses the panel quantile method. The choice of this approach is because of the fact that, unlike previous studies that use econometric techniques such as the synthetic control method (Hartwell et al , 2022), GMM (Anyanwu et al , 2021), FMOLS (Alvarado et al , 2021), dynamics ordinary least square (Kim et al , 2020), VAR (Farzanegan and Krieger, 2019), the quantile method allows us to analyze a variable (X) on the dependent variable (Y) at different conditional distributions (quantiles) of Y and not only at its conditional mean distribution. This allows us to better understand the effect of X on Y.…”

Section: Empirical Methodologymentioning

confidence: 99%

“…Indeed, natural resources account for 65% of total exports in SSA (IMF, 2018). Income inequality has received attention from several authors in the literature (Hartwell et al , 2022; Baulant and Albouz, 2021; El Allam and Abdouni, 2021; Nguyen and Nasir, 2021; Njangang et al , 2022), there is however, no consensus on the key socioeconomic, political and cultural determinants of income inequality among various studies.…”

Section: Introductionmentioning

confidence: 99%

“…Despite this extensive literature on the effects of natural resources on economic indicators, the relationship between natural resources and income inequality remains under-documented. Moreover, there is yet no concensus among existing studies on the topic (Buccellato and Mickiewicz, 2009; Goderis and Malone, 2011; Carmignani, 2013; Parcero and Papyrakis, 2016; Anyanwu et al , 2016; Nademi, 2018; Kim and Lin, 2018; Farzanegan and Krieger, 2019; Hartwell et al , 2019; Kim et al , 2020; Fawaz and Frey, 2020; Alvarado et al , 2021; Anyanwu et al 2021; Hartwell et al , 2022). For authors such as Gylfason and Zoega (2002), Carmignani (2013); Buccellato and Mickiewicz (2009), Farzanegan and Krieger (2019), natural resources have a positive relationship with income inequality.…”

Section: Introductionmentioning

confidence: 99%

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Revisiting the effects of natural resources on income inequality in Sub-Saharan Africa

Avom

Ovono

Nkoa

2022

IJDI

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Purpose This study aims to analyze the effects of natural resource rents on income inequality. Design/methodology/approach This study uses a panel quantile regression (QR) approach for 42 Sub-Saharan African (SSA) countries over the period 1998–2018. Findings The results show that natural resource rents have a negative and statistically significant effect on income inequality. Regarding the types of resources, the results show that coal rents increase inequality, while forestry and oil rents reduce income inequality. The results also show that the effects of mining and gas rents vary along the income inequality distribution. Finally, the results reveal a negative and significant effect of natural resource rents on income inequality in all sub-regions except Southern Africa. Practical implications The results suggest that the SSA Governments should intensify the implementation of income redistribution policies such as family allowances to poor families with multiple children and public sector job creation. SSA policymakers should also increase access to electricity, and internet, and allocate a portion of oil revenues to create an intergenerational sovereign wealth fund. Originality/value First, few studies have analyzed the effects of various types of natural resource rents on income inequality. To this end, this study used the QR method to examine the impact of natural resource rents on inequality, by laying emphasis on various types of natural resources. This study takes into account the likely heterogeneity across countries that may exist when considering a sample such as SSA countries, by examining the effects in the different sub-regions that make up this part of Africa (Central Africa, West Africa, Southern Africa and East Africa).

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Section: Resultssupporting

confidence: 92%

Section: Empirical Methodologymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Revisiting the effects of natural resources on income inequality in Sub-Saharan Africa

Avom

Ovono

Nkoa

2022

IJDI

View full text Add to dashboard Cite

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“…3 In general, there is a flourishing literature on the impact of natural resources on income inequality. For a recent summary of this literature, see Hartwell et al (2021a). 4 We define income inequality as the extent to which income is unevenly distributed among a population within and between the regions.…”

Section: Introductionmentioning

confidence: 99%

Does Weather Sharpen Income Inequality in Russia?†

Otrachshenko

Popova

2021

Review of Income and Wealth

Self Cite

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Using subnational panel data, this paper analyzes how hot and cold extreme temperatures and precipitation affect economic activity and income distribution in Russia. We account for the intensity of exposure to extreme temperatures by analyzing the impacts of both single and consecutive days with extreme temperature, i.e., heat waves and cold spells, and examine several labor market channels behind those effects. We find that consecutive extremely hot days decrease regional GDP per capita but do not affect income inequality. Poor regions are affected by extreme temperatures relatively more than rich regions. These effects occur because of reallocation of labor from employment to unemployment, an increase in prices in poor regions, and to some extent because of changes in the industrial employment structure, while relative wages are not affected. Extremely cold days, both single and consecutive, as well as extreme precipitation have a limited impact on economic activity and income distribution.

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The effect of Islamic revolution and war on income inequality in Iran

Farzanegan

Kadivar

2023

Empir Econ

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Existing research has pointed to the decreasing effect of revolutions and wars on income inequality. It is unclear whether this reduction is the result of ongoing changes before revolutions and wars or if the results are standalone effects. In this study, we focus on the case of the Iranian Revolution of 1978–1979 and the subsequent Iran–Iraq war from 1980 to 1988. We use the synthetic control method to study the effect of revolution and war on changes in income inequality levels. Had there been no revolution and war in Iran, how would income inequality have developed? Utilizing the synthetic control method, we create a counterfactual Iran that reproduces the socioeconomic characteristics of Iran before the Islamic revolution. Then, we compare the income inequality of the counterfactual Iran without the revolution and war to the factual Iran under a new political regime for the period of 1970–1988. Our results, based on two different indicators of Iran’s Gini index, show a significant effect of the revolution and war on reducing income inequality. Over the entire 1979–1988 period, on average and per year, the Gini index of Iran was reduced by approximately three standard deviations of the index. The main findings are robust to a series of tests, including placebo tests.

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Natural resources and income inequality in developed countries: synthetic control method evidence

Cited by 25 publications

References 79 publications

Revisiting the effects of natural resources on income inequality in Sub-Saharan Africa

Revisiting the effects of natural resources on income inequality in Sub-Saharan Africa

Does Weather Sharpen Income Inequality in Russia?†

The effect of Islamic revolution and war on income inequality in Iran

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