Who Profits from Windfalls in Oil Tax Revenue? Inequality, Protests, and the Role of Corruption

We investigate the relationship between oil windfalls and income inequality using subnational data of one resource-richest highly unequal countries in world – Russia. While previous literature produced contradictory findings due to use an aggregate measure rents mainly cross-national settings, we focus exclusively on that accrue governments across country. Our estimation strategy takes advantage two specific features Russian taxation: 1) policy change when sharing extraction taxes with local budgets was discontinued; 2) tax formula being tied directly international prices making price shocks exogenous rents. When look at period revenues shared regional governments, find had increased benefited wealthiest quintile population regions more intense rent-seeking. Further, positive combined greater rent-seeking reduced share labor but from unidentified sources traditionally associated corruption. These effects disappeared after government discontinued revenue governments. Finally, examine some political implications rising appropriation windfalls. a effect frequency protests grievances among poor disadvantaged social groups; this effect, however, exists only relatively democratic regions.