Natural Resources, Wage Growth and Institutions - a Panel Approach

• Type: Article in International Scientific Journal
• Date: 2013

Authors

Torres, N (Author) Other; Óscar Afonso (Author) FEP; Soares, I (Author) FEP

Journal

Title: World Economy

Vol. 36

Pages: 661-687

ISSN: 0378-5920

Publisher: Wiley-Blackwell

Indexing

ISI Web of Knowledge - 5 Citations

Scopus - 6 Citations

Econlit

Other information

Authenticus ID: P-005-16N

DOI: 10.1111/twec.12023

Abstract (EN): This paper examines the effect of natural resource export dependence and fiscal responsibility on wage growth which is derived from the labour first-order condition and estimated using a panel growth-accounting framework. Using annual data the study accounts for the variability of resource revenues one of the major difficulties of managing these resources. The control variables include the most crucial growth factors. Due to insufficient annual data human capital is only considered inside wages as in many endogenous growth models. We estimate the influence on real wage growth arising from the growth-impacts of natural resources through labour and capital efficiency while controlling for fiscal responsibility which proves a suitable proxy for policies and institutions in a single-panel case. The results show that responsible fiscal policy assessed by the budget balance prevents (variable) diffuse and point-source resources from hindering real wage growth (through labour efficiency) a result also significant in a sub-sample of un-free countries. The hypothesis of a resource curse working through institutions and reflected on real wage growth holds for resource export shares but not adjusting for re-exportation. Overall resource effects are jointly insignificant even though point-source resources show a positive impact through capital efficiency. © 2013 Blackwell Publishing Ltd.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 27