Is Education Really Underfunded in Resource-Rich Economies? Evidence from a Panel of U.S. States

Existing development literature has argued that natural-resource endowments curse economic prosperity by reducing expenditures on education. According to this theory, public and private agents lack su cient foresight to make optimal economic decisions and become poor as a result. Using a panel of U.S. state-level data, this paper o ers evidence to the contrary. Public spending on education in resource-rich states greatly exceeds that in resource-scarce ones, and private education services are imperfectly crowded out as a result. More generally, this paper highlights the importance of exploiting both spatial and temporal variation in resource wealth when studying resource-rich economies.