Natural Resource Rents and Income/Wealth Inequality in the European Union

Abstract

Starting with the debate on the “resource curse”, the main aim of this paper is to evaluate the impact of natural resource rents on income/wealth inequality in the European Union (EU) during the period from 1990 to 2023. Excepting the Gini index, natural resources rents reduced other measures of income and wealth inequality, and the results indicate that growth has a masking mediating effect on the Gini index, but no mediation role of GDP was observed in the case of the top 1% income/wealth share. The income inequality based on the top 1% share significantly increased in Denmark after the discovery of oil and gas relative to the control group composed of Finland and Sweden. Other control variables are considered, and some policy recommendations are proposed to reduce income/wealth inequality.