Do Oil Windfalls Improve Living Standards? Evidence from Brazil

Francesco Caselli and Guy Michaels

No 15550, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use variation in oil output among Brazilian municipalities to investigate the effects of resource windfalls. We find muted effects of oil through market channels: offshore oil has no effect on municipal non-oil GDP or its composition, while onshore oil has only modest effects on non-oil GDP composition. However, oil abundance causes municipal revenues and reported spending on a range of budgetary items to increase, mainly as a result of royalties paid by Petrobras. Nevertheless, survey-based measures of social transfers, public good provision, infrastructure, and household income increase less (if at all) than one might expect given the increase in reported spending. To explain why oil windfalls contribute little to local living standards, we use data from the Brazilian media and federal police to document that very large oil output increases alleged instances of illegal activities associated with mayors.

JEL-codes: E02 E62 H11 H40 H71 H72 H75 H76 O11 O13 Q32 Q33 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-ene and nep-mac
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Citations: View citations in EconPapers (65)

Published as Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-38, January.

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Journal Article: Do Oil Windfalls Improve Living Standards? Evidence from Brazil (2013)
Working Paper: Do oil windfalls improve living standards? Evidence from Brazil (2013)
Working Paper: Do Oil Windfalls Improve Living Standards? Evidence from Brazil (2009)
Working Paper: Do Oil Windfalls Improve Living Standards? Evidence from Brazil (2009)
Working Paper: Do oil windfalls improve living standards?: evidence from Brazil (2009)
Working Paper: Do Oil Windfalls Improve Living Standards? Evidence from Brazil (2009)
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