The Value of Redistribution: Natural Resources and the Formation of Human Capital Under Weak Institutions

47 Pages Posted: 31 Jul 2017

See all articles by Jorge Agüero

Jorge Agüero

University of Connecticut - Department of Economics

Carlos Balcázar Salazar

World Bank

Stanislao Maldonado

Universidad del Rosario

Hugo Ñopo

Inter-American Development Bank (IDB); IZA Institute of Labor Economics

Abstract

We exploit time and spatial variation generated by the commodities boom to measure the effect of natural resources on human capital formation in Peru, a country with low governance indicators. Combining test scores from over two million students and district-level administrative data on mining production and the redistribution of mining taxes to local governments, we find no effect from production. However, redistribution of mining taxes increases math test scores by 0.23 standard deviations. We identify the improvements in the quality of teachers and in school infrastructure, together with increases in adult employment and health outcomes of adults and children, as key mechanisms from the redistribution. Policy implications for the avoidance of the natural resource curse are discussed.

Keywords: resource booms, academic achievement, intergovernmental transfers

JEL Classification: H7, H23, I25, O15, Q32

Suggested Citation

Agüero, Jorge and Balcazar Salazar, Carlos and Maldonado, Stanislao and Nopo, Hugo, The Value of Redistribution: Natural Resources and the Formation of Human Capital Under Weak Institutions. IZA Discussion Paper No. 10884. Available at SSRN: https://ssrn.com/abstract=3010661

Jorge Agüero (Contact Author)

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States

Carlos Balcazar Salazar

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Stanislao Maldonado

Universidad del Rosario ( email )

Calle 12 No. 6-25
Bogota, DC
Colombia

Hugo Nopo

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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