The long-term effect of resource booms on human capital

Abstract

Resource booms may reduce human capital accumulation. They can increase the opportunity costs of education by favoring low-skilled jobs, thus making it optimal for individuals to interrupt their education. This study uses proprietary individual-level data to study the long-term effects of an oil boom on human capital in a developing country. Exploiting variation in the timing of the shock and geographic differences in the effect of exposure to the boom, I find that exposure to the boom decreased college completion, increased low-skill employment, and had limited long-term effects on wealth accumulation.