Oil boom, rent sharing, job prospects and human capital investment: Evidence from Chad

Abstract

A large body of literature shows that the drop in educational attainment resulting from the resource boom is one of the major drivers of the so-called resource curse. This paper explores how upstream actions can avoid this resource curse and promote human capital development at the local level. Specifically, I examine how a rent-sharing model and the employment opportunities induced by an oil boom for native populations affect secondary education decisions in Chad’s oil region. Using a synthetic control method, I find that these measures increased secondary school attendance in the region. Similar results were obtained using a difference-in-differences approach. In terms of mechanisms, the results show that labor market opportunities and regulations were more effective in promoting investment in education than the rent-sharing model. Finally, I note that these measures reduced dropouts rather than increasing attendance at all levels.