We Don&Apos;T Need No Education: The Effect of Natural Resource Income Shocks on Human Capital

33 Pages Posted: 11 Jan 2021

See all articles by Mark Gradstein

Mark Gradstein

Ben-Gurion University of the Negev - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); World Bank - Development Research Group (DECRG)

Phoebe Ishak

affiliation not provided to SSRN

Abstract

We explore the effects of persistent income shocks on human capital using oil price fluctuations in a large sample of relevant African countries and employing micro data from multiple waves of the Demographic and Health Survey (DHS). Theoretically, such shocks enable human capital investment via the standard income effect; but also crowd it out because of substitutability between natural resource and human capital income sources - so the net outcome can go either way. Our model also suggests that the relative strength of the two effects depends on the age at which the shock is experienced and the affected gender. Consistent with these insights, we find that income shocks in early life enhance educational attainment and other derived outcomes; but reduce them if experienced in adolescence, especially for females. These results survive multiple robustness checks, and their broader implications are discussed.

JEL Classification: O12, I2

Suggested Citation

Gradstein, Mark and Ishak, Phoebe, We Don&Apos;T Need No Education: The Effect of Natural Resource Income Shocks on Human Capital. IZA Discussion Paper No. 14004, Available at SSRN: https://ssrn.com/abstract=3762874 or http://dx.doi.org/10.2139/ssrn.3762874

Mark Gradstein (Contact Author)

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
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+97 2 8647 2941 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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Germany

HOME PAGE: http://www.cesifo.de

Centre for Economic Policy Research (CEPR)

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United Kingdom

World Bank - Development Research Group (DECRG)

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MSN3-311
Washington, DC 20433
United States

Phoebe Ishak

affiliation not provided to SSRN

No Address Available

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