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Oil Dependency and Quality of Education: New Empirical Evidence

Mohammad Reza Farzanegan () and Marcel Thum ()

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: The resource curse hypothesis suggests that resource-rich countries (especially oil dependent economies) show lower economic growth rates compared to resource-poor countries. We add to this literature by providing empirical evidence on a new transmission channel of the resource curse, namely, the negative long-run effect of oil rents on the quality of education. Our empirical analysis for more than 70 countries in the period of 1995-2015 shows a significantly positive effect of oil rents on the quantity of education measured by government spending on primary and secondary education. However, we find a robust and negative long-run effect of oil rents dependency on the objective and subjective indicators of quality of education, controlling for a set of other drivers of education quality and regional dummies. The significant negative effect of oil rents dependency on education quality can be explained by both the demand (e.g., skill acquisition) and supply (e.g., teacher quality) side channels.

Keywords: oil rents; resource curse; quality of education; quantity of education (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-ene
Date: 2017
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