UW-Madison UW-Madison

Department Seminar

When are Resources Curses and Blessings? Evidence from the U.S. 1935-1999

presented by
Karen Clay
Heinz School of Public Policy & Management
Carnegie Mellon University

Following Sachs and Warner (1995, 1997), the relationship between natural resources and growth has attracted extensive attention from economists and policymakers. One challenge in terms of understanding that relationship is that the literature is large and reaches different conclusions about the existence of a resource curse and, for papers that find a curse, the conditions under which a curse may exist. This paper uses new state-level panel datasets spanning 1935-1999 to investigate the relationship between natural resources and growth in the context of the American states. Our empirical strategy is closely related to Allcott and Keniston (2015) and Bartik (1991). We correlate changes in state per capita income with exogenous measures of resources – the interaction of national resource employment or income with cross sectional variation in resource reserves. The paper has three main findings. First, the relationship between growth and natural resources varies across types of natural resources – agriculture, oil, and coal – and one-year and five-year intervals and over different time periods between 1935 and 1999. In some cases, relationships are positive, and in others the relationships are not statistically significantly different from zero. Second, the relationship between resources and growth may differ depending on whether the change is an increase or a decrease. During the second half of the twentieth century, the effects of oil and coal booms were smaller than the effects from busts. This asymmetric effect is a form of a resource curse and is consistent with Black et al (2005) and Jacobsen and Parker (2015), who find that booms and busts made U.S. counties that experienced them worse off. Third, we can replicate many of the findings from previous studies of the resource curse in the United States. The divergent findings are largely due to the use of different dependent variables, measures of resources, estimation techniques, and time frames.

March 31, 2017
12:00PM - 1:00PM
Taylor-Hibbard Seminar Room (Rm103 Taylor Hall)
For additional information contact:
Dominic Parker
413 Taylor Hall
(608) 262-8916
email: dominic.parker@wisc.edu

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Last updated on Thu, Jun 30, 2016 9:10am