Oil shocks and household behavior: Evidence for Venezuelan Surveys

• In Event: The subnational resource curse in the Andes: Empirical evidence and policy implications

Abstract

The role played by natural resources in development has been part of the economic policy debate for some time. Most of the debate has focused on cross country or country case studies. Research on impact of the resource sector on subnational areas has been limited. In this paper we estimate the effects of the oil sector in Venezuela. I firstly use household survey data from to estimate the effect of oil production on the local economy, to then move to a particular household behavior: human capital accumulation. We found that local oil production impacts local income and employment. I found that localities where oil is produced in Venezuela tend to have higher labor force participation and lower educational attainment. Nevertheless, these effects are not related to oil production and investment shocks. The estimations show that the effects are present in cross-section estimations but not in panel estimations. This suggests that the skill demand of on oil states is different to non-oil states, but that is not related to oil shocks

Author

• Osmel Manzano, IESA