Income inequality and the oil resource curse

Osiris Jorge Parcero and Elissaios Papyrakis

Papers from arXiv.org

Abstract: Surprisingly, there has been little research conducted about the cross-country relationship between oil dependence/abundance and income inequality. At the same time, there is some tentative evidence suggesting that oil rich nations tend to under-report data on income inequality, which can potentially influence the estimated empirical relationships between oil richness and income inequality. In this paper we contribute to the literature in a twofold manner. First, we explore in depth the empirical relationship between oil and income inequality by making use of the Standardized World Income Inequality Database; the most comprehensive dataset on income inequality providing comparable data for the broadest set of country-year observations. Second, this is the first study to our knowledge that adopts an empirical framework to examine whether oil rich nations tend to under-report data on income inequality and the possible implications thereof. We make use of Heckman selection models to validate the tendency of oil rich countries to under-report and correct for the bias that might arise as a result of this; we find that oil is associated with lower income inequality with the exception of the very oil-rich economies.

Date: 2024-01
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2401.04046

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