Thursday, February 21, 2013

Natural Resources, Wage Growth and Institutions – a Panel Approach

The World Economy: 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 frame,work. 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 suit,able proxy for policies and institutions in a single-panel case. The results show that responsible fiscal policy, assessed by the bud,get balance, pre,vents (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. Over,all, resource effects are jointly insignificant, even though point-source resources show a positive impact through capital efficiency.

No comments:

Post a Comment

Reactions welcome! Please use your full name.