OxCARRE seminar: Getting Incentives Right: Human Capital Accumulation and Natural Resource Booms

Today, OxCARRE's Gerhard Toews will present on

Getting Incentives Right: Human Capital Accumulation and Natural Resource Booms

Abstract (from Februari 2014 version)

One of the major factors restricting demand for education in developing economies is limited employment opportunities for educated labour force on the local job market. Thus, removing this obstacle should become a crucial factor contributing to the accumulation of human capital. We offer an empirical test for this proposition, looking at the consequences of resource boom for demand for education in Kazakhstan in 2001-2005, using a unique dataset of the Household Budget Survey. The oil boom provides us with the necessary exogenous variation to establish the causality. We show that in resource-rich regions of Kazakhstan resource boom increases the likelihood for the households to pay tuition fees and the probability of employment in the formal sector for educated labour force. We are able to refute the conjecture that our effect is driven merely by growing income of the households (Engel curve effect). Thus, in addition, our paper also provides insights as to whether private demand for education can compensate the known deficits of public provision of education in resource-rich countries.

Working paper available here [eea-esem.com]