TY  - JOUR
AU  - Caselli,Francesco
AU  - Michaels,Guy
TI  - Do Oil Windfalls Improve Living Standards? Evidence from Brazil
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15550
PY  - 2009
Y2  - December 2009
UR  - http://www.nber.org/papers/w15550
L1  - http://www.nber.org/papers/w15550.pdf
N1  - Author contact info:
Francesco Caselli
Department of Economics
London School of Economics
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: (44) (0) 2079557498
E-Mail: f.caselli@lse.ac.uk

Guy Michaels
Department of Economics
London School of Economics
Houghton Street
London  WC2A 2AE
United Kingdom
Tel: +44(0)20-7852-3518
E-Mail: g.michaels@lse.ac.uk
AB  - 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.
ER  -