from metals, minerals, agriculture, food and beverages have a negative and statistically significant effect on economic growth. Economic growth is positively related to billionaire net worth, with the coefficient being statistically significant at the 1% level. These findings stand whether billionaire or country fixed effects are employed. The instruments reject under-identification. The instruments also pass the overidentification test, especially when billionaire fixed effects are used, indicating that the validity of the instruments cannot be rejected. The instruments are also strong, given that they pass the weak identification test, exceeding the Stock and Yogo critical values.

The findings thus far point to a plausible mechanism whereby top incomes increase in the face of growth or commodity terms of trade shocks. We test whether this is conditional on the degree of market contestability/competition and quality of institutions in the economy. We use the sample average of the control of corruption quality of governance indicator. This captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand. We also use the sample averages of the World Economic Forum’s indicators on the intensity of location and market domination. The former measure considers the distortive effect of taxes and subsidies on competition, the extent of market dominance, and competition in services. The market dominance indicator measures perceptions of whether corporate activity is characterized by a few business groups or many firms. For all the indicators, higher values imply better governance/market contestability.

Table 6 reports the findings. All interactions between governance/competition and commodity price shocks have negative and statistically significant coefficients. The same results are found when the governance/competition variables are interacted with resource rents. The results indicate that in countries with more contestable markets and good governance, top incomes are less likely to increase as a result of positive commodity price shocks. These findings are consistent with Andersen et al. (2017) that finds that exogenous shocks in petroleum income increase hidden wealth in offshore accounts for economies where institutional checks and balances are weak.<sup>8</sup>

# _4.2 Robustness Checks_

_Sector of activity and structure of the economy_ The estimates provided thus far are based on parsimonious specifications. In the following, we explore the robustness of the baseline findings along several dimensions. First, the structure of the economy may be an important predictor of billionaire net worth. Second, the sector of billionaire activity may also matter, to the extent that it varies over time. In tables A3 and A4, we replicate tables 1 and 2 respectively with the inclusion of the share of manufacturing and agriculture as a percent of GDP as additional covariates. The sign, significance and magnitude are relatively unchanged for the commodity price shock and resource rents coefficients.

The Forbes magazine database does include data on the billionaire sector of activity that encompass about 57 sectors of activity. However, this variable is measured with error given a single billionaire can be involved across multiple sectors. Furthermore, the 57 sectors do not seem to be mutually exclusive. We therefore recategorize the 57 sectors into 6 broad categories (see table A7) that include: (a) Agriculture (b) Extractives (c) Manufacturing (d) Services (e) IT and (f) Others. In tables A5 and A6 we present the results for commodity price shocks and resource rents respectively, after accounting for sector fixed effects for the narrow 57 categories, and the broad 6 categories. Our main results are robust. Indeed, the magnitude, sign and significance of the coefficients are similar to our baseline estimates.

> 8 See Ross (2015) for a summary of the literature on the relationship between institutions and commodity booms.

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