The Effect of Oil Abundance on the Relationship between Growth and Inequality

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Davoodalhosseini, Mohammad Reza | 2009

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 39608 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Nili, Farhad
Abstract:
Empirical results in this research show that oil abundance in an economy tends to increase income inequality. Three mechanisms: Trade, civil liberties and imperfections of financial markets can explain this empirical finding, with the first being an alternative explanation for the Dutch disease. Besides, due to the influence it could have on parents underestimating the future costs of their children and because of the rents it produces, Oil abundance could reduce the opportunity cost of having children which results in a higher fertility rate. Moreover, empirical results confirm the negative relation between inequality and growth through the fertility mechanism. Therefore apart from explaining the higher income inequality and fertility rate in Oil-abundant countries, this research introduces a new mechanism for explaining the curse of natural resources
Keywords:
Economic Growth ; Inequality ; Natural Resource Curse ; Oil Abudance ; Fertility Rate