Do Oil Windfalls Improve Living Standards? Evidence from Brazil

Abstract

We use variation in oil output among Brazilian municipalities to investigate the effects of resource windfalls on government behavior. Oil-rich municipalities experience increases in revenues and report corresponding increases in spending on public goods and services. However, survey data and administrative records indicate that social transfers, public good provision, infrastructure, and household income increase less (if at all) than one might expect given the higher reported spending. (JEL H41, H75, I31, O13, O15, O17, O18)