Escaping the resource curse: does resource dependence reduction mitigate income inequality?

Zhijiu Yang and Mengxu Li ()
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Zhijiu Yang: Jiangnan University
Mengxu Li: China University of Geosciences

Palgrave Communications, 2024, vol. 11, issue 1, 1-13

Abstract: Abstract This paper quantifies the impact of resource dependence reduction on income inequality. Using an exogenous shock triggered by China’s sustainable program for resource-based regions and prefecture-level data during 2004–2020, we perform a difference-in-differences estimation and find that reducing resource dependence has a sizable narrowing effect on urban-rural income gap. On average, the sustainable program reduces the gap (as measured by a ratio indicator) by 4.11%, with the effect being more pronounced in regions with initial low institutional quality. Further evidence suggests that the rise of labor-intensive industries and the increased rural investment, which benefit the poor more, help explain the narrowing effect. This paper sheds light on the sustainable development of resource-dependent regions.

Date: 2024
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DOI: 10.1057/s41599-024-04228-2

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