discoveries and exploitation led to service expansion and industry shrinkage (Caselli and Michaels 2013).

A concentrated distribution of natural resource rents can increase inequality (between rich and poor, or across regions of a country). For example, resource dependence is found to be correlated with a larger Gini index of inequality (Gylfason and Zoega 2003), while Fum and Hodler (2010) suggest that natural resources increase income inequality in ethnically divided societies but not in ethnically homogenous societies. Increased inequality can lead to frustration and social unrest, due for example to differences between actual and expected benefits (Ross 2007), particularly in producing regions. In this regard, Collier and Hoeffler (1998, 2002, 2005) show that natural resources significantly increase the chances of civil conflict in a country. Diamonds (Lujala 2009), oil (Fearon 2005; Fearon and Laitin 2003; Humphreys 2005; Ross 2004), and narcotics (Angrist and Kugler 2008) also pose the highest risks of war.

Mehlum et al. (2006) find that the resource curse applies typically in countries with rent-seekerfriendly institutions, but not in countries with producer-friendly institutions. Likewise, Boschini et al. (2007) find evidence suggesting that resource-rich countries experience a curse only when institutions are poor; in contrast, sufficiently good institutions can turn resource abundance into a blessing. Papyrakis and Gerlagh (2004) also show that natural resource wealth has a negative impact on growth, but does so through transmission channels such as investment, corruption, openness, terms of trade, and schooling.

Finally, the literature suggests that the impact of resources differs according to their type. Boschini et al. (2007) find results indicating that when countries are rich in diamonds and precious metals, both the positive and negative effects of natural resources are larger. This result can be explained by ‘appropriability’ characteristics (i.e. high value, easy storage, easy transportation or smuggling, and quick sale), which make these types of natural resources more prone to rent-seeking behaviour, corruption, and conflict. Easily appropriable point-source resources, such as oil, diamonds, and minerals, are more likely to be harmful to institutional quality and growth than diffuse resources such as agriculture (rice, wheat, and animals), whose rents are spread throughout the economy (Auty 1997; Isham et al. 2005; Mavrotas et al. 2011; Woolcook et al. 2001).

Most of the previous studies are cross-country analyses. A distinctive feature of our paper is that we use panel data on mineral deposits to estimate inequality at district level during 2001– 2012, a period also characterized by relatively high growth in Africa. Gennaioli et al. (2014) argue that there are large regional differences within countries that need to be understood; the use of subnational panel data therefore accounts for intra- and inter-regional differences that can confound estimates. From an estimation standpoint, our study is also free from omitted variable bias emanating from the large unobservable differences that are usually present in cross-country studies.<sup>8</sup>

> 8 Lederman and Maloney (2008) consider cross-country heterogeneity a key reason for the elusiveness of empirical evidence on the resource curse.

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