Oil Rent and Income Inequality in Selected Developing Countries: Does Corruption Matter?

Abstract

Using a most available data on a sample of 26 developing countries, this paper addresses the effect of oil rent on inequality. Mobilizing dynamic panel data specification over the period 1996-2008, econometric results yields two important findings. First, there is a non-linear (U shaped) relationship between oil rent and inequality. Specifically, income inequality falls at the early stage of the increase of oil rent and then rise steadily as oil revenues increase. Second, this non-linear effect is conditional to the control of corruption.