The Nordic Model and the Oil Nation

Roberto Iacono ()

Working Papers from HAL

Abstract: This paper investigates the long-run economic effects of large natural resource endowments, through a comparative quantitative case study. Focusing on three economic features of the so-called Nordic model, namely low income inequality, high labour productivity growth, and high welfare spending, this study estimates the shocks to these key features in Norway after the country became one of the world''s largest oil exporters. A synthetic control unit constructed by weighting Nordic countries that resemble the economy of Norway without being oil producers provides the most reliable comparison unit to estimate the causal effects constituting the paper's threefold contribution. First, results show that the resource windfall contributed to relatively higher top income shares, adding natural resources to the set of drivers of income inequality in Norway. Second, the resource windfall boosted labour productivity. Third, resource revenues contributed to financing the steadily increasing gap between Norway and other Nordic countries in the degree of welfare generosity. Sensitivity tests through in-time placebo tests and difference-in-differences estimations confi rm the validity of these results.

Keywords: Nordic Model; Resource windfall; Synthetic Control Method; Norway (search for similar items in EconPapers)
Date: 2016-09-01
New Economics Papers: this item is included in nep-eec and nep-ene
Note: View the original document on HAL open archive server: https://hal.science/hal-01402143
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Norwegian Oil Bonanza and the Scandinavian Model in Comparative Perspective (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01402143

DOI: 10.2139/ssrn.2703816

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