Natural Resources, Wage Growth and Institutions – a Panel Approach



This paper exam,ines the effect of nat,u,ral resource export depen,dence and fis,cal respon,si,bil,ity on wage growth, which is derived from the labour first-order con,di,tion and esti,mated using a panel growth-account,ing frame,work. Using annual data, the study accounts for the var,i,abil,ity of resource rev,e,nues, one of the major dif,fi,cul,ties of man,ag,ing these resources. The con,trol vari,ables include the most cru,cial growth fac,tors. Due to insuf,fi,cient annual data, human cap,i,tal is only con,sid,ered inside wages as in many endog,e,nous growth mod,els. We esti,mate the influ,ence on real wage growth aris,ing from the growth-impacts of nat,u,ral resources through labour and cap,i,tal effi,ciency while con,trol,ling for fis,cal respon,si,bil,ity, which proves a suit,able proxy for pol,i,cies and insti,tu,tions in a sin,gle-panel case. The results show that respon,si,ble fis,cal pol,icy, assessed by the bud,get bal,ance, pre,vents (var,i,able) dif,fuse and point-source resources from hin,der,ing real wage growth (through labour effi,ciency), a result also sig,nif,i,cant in a sub-sam,ple of un-free coun,tries. The hypoth,e,sis of a resource curse work,ing through insti,tu,tions and reflected on real wage growth holds for resource export shares, but not adjust,ing for re-expor,ta,tion. Over,all, resource effects are jointly insig,nif,i,cant, even though point-source resources show a positive impact through cap,i,tal effi,ciency.