Making wealth sharing more efficient in high-rent countries: the citizens’ income

Abstract

This paper argues that hydrocarbon producers with high rents per capita constitute a specific category in the broader universe of rent-dependent countries, facing a specific set of development challenges that are not shared by mid-rent countries. It surveys patterns of rent distribution in high-rent countries (HRCs), focusing on energy subsidies and excessive public employment, and argues that these result in declining energy efficiency and labor productivity as well as exclusion of nationals from the private labor market. It then proposes unconditional cash grants for HRC citizens in combination with subsidy and public employment reform as a mitigation strategy to minimize the HRC-specific distortive effects of rent distribution. It is shown that none of the conventional counterarguments to unconditional cash grants applies in the context of HRCs.

Policies to Nationalize the Private Sector Labor Force in a Matching Model with Public Jobs and Quotas

“…Some studies support decentralized measures and propose financing the measures in a budget-neutral way by reducing the public sector wage bill or increasing administered energy prices. Hertog (2017) proposes labor market reforms for high-rent countries based on citizen revenues financed by hydrocarbon rents. This system can deliver better employment outcomes than the usual redistribution system based on public employment and administered prices can.…”

“…Then, in line with Tamirisa and Duenwald (2018), we examine policies by which private labor subsidies are financed through a public wage bill reduction. Finally, we consider the effects of financing the subsidy with the proceeds from a domestic energy price reform, as Hertog (2017) proposes.…”

Optimizing Qatar’s energy system for a post-carbon future

“…• Subsidies on all energy commodities and water must be phased out, as they have been shown to lead to resource mismanagement and benefit rich households more than poor ones [35]. • Energy and water efficiency measures must be mandatory instead of voluntary.…”

“…At a target investment portfolio of $1 trillion by 2050, well within the range of scenarios generated by our model, and a yearly return of just 5%, 500,000 Qatari citizens could each be provided with a universal basic income of $100,000 every year starting in 2050, funded only by the yearly returns generated by the investment portfolio. Along with a corresponding decrease in employment in the public sector, citizens can pursue their own ambitions with little economic risk, either by joining the private sector, starting their own business or volunteering around the world [35]. It is vital that citizens are consulted through this process and have an economic stake in the future of their country.…”

Toward sustainable use of natural resources: Nexus between resource rents, affluence, energy intensity and carbon emissions in developing and transition economies

“…Based on the resource curse hypothesis, the government is not efficient in resource allocation due to rent‐seeking behavior among public office holders and, consequently, the obligation to align resource distribution with political interests (Graafland, 2019; Tacconi & Williams, 2020). Policy discussions and empirical evidence arguably posit that aligning the distribution of rents to political interests, as evident in fossil fuel subsidies in many developing and transition economies, encourages wasteful consumption and retards the development of clean energy sources (Hertog, 2017; Li & Sun, 2018). These factors underscore the importance of resource rents in understanding the growing environmental sustainability concerns in developing and transition economies.…”