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Natural Rerources and public Sector Wages

Pernille Parmer ()
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Pernille Parmer: Department of Economics, Norwegian University of Science and Technology

Working Paper Series from Department of Economics, Norwegian University of Science and Technology

Abstract: This paper studies the effects of natural resource abundance on wages for local public sector leaders in Norway. Local governments with high public revenues from the hydropower sector have fewer economic constraints compared with other local governments. High revenues might make it easier for public sector leaders to use their political power to increase leader wages relative to the wages received by other working groups. Novel data on local public sector wages, in combination with an exogenous instrument for hydropower revenues, lead to a unique empirical framework for this analysis. The instrumental variable estimates exploit the variation in geographical and topological characteristics, such as the length of rivers, river slope, water ow volume, and precipitation. Although the results indicate that public sector wages are positively a ected by local government revenues, there is no evidence that the revenue effect is stronger for leader wages than for the wages of other working groups.

Keywords: Public sector wages; resource curse; rent-seeking; identification; local governments; political economy (search for similar items in EconPapers)
JEL-codes: D78 H27 H71 H75 Q2 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-12-10
New Economics Papers: this item is included in nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:nst:samfok:16114

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