Social and Behavioral Sciences Commons^™

Demographic Transition In Resource Rich Countries: A Bonus Or A Curse?, Kjetil Bjorvatn, Mohammad Reza Farzanegan

Prof. Dr. Mohammad Reza Farzanegan

While East Asia benefited significantly from its demographic transition in the 1970s and 1980s, the youth wave that we currently observe in the Middle East and North Africa (MENA) has not had a similar impact on economic development. The present study argues that resource wealth is an important reason for understanding why. We develop a simple model highlighting how the income effect of increased labor supply may depend on resource rents, and provide empirical evidence that support the theoretical predictions. Using panel data covering the period from 1970–2006 for more than 120 countries, we find a negative interaction effect between …