Development outcomes, resource abundance,and the transmission through inequality

The paper studies the effect of resource abundance on human development. A simple theory is presented to show that resource abundance negatively affects human development through its effect on inequality. The prediction of the theory is then tested using a system of three equations. Estimates indicate that the transmission channel through inequality is statistically significant and economically relevant even after controlling for per-capita income, institutional quality, and other determinants of both human development and inequality.