Oil Royalties and the Provision of Public Education in Brazil

51 Pages Posted: 2 Aug 2019 Last revised: 13 May 2020

See all articles by Jeff Chan

Jeff Chan

Wilfrid Laurier University

Ridwan Karim

University of Toronto - Department of Economics; Wilfrid Laurier University

Date Written: May 12, 2020

Abstract

This paper examines how resource-based windfalls to Brazilian municipalities' revenues affects their provision of education. We exploit a feature of Brazilian legislation that mandates that revenues accrued through oil production must be shared with municipalities that are judged to be owed royalties through a series of exogenously determined criteria and formulae. The as-if random distribution of oil revenues to municipalities allow us to investigate the causal relationship between oil royalties and provision of public education in Brazil. Using within-municipality variation in oil revenues per capita, we find that receiving more oil royalties increases municipal education expenditures, which translates into more teachers, classrooms, and schools per capita. Importantly, these effects are present only for municipally funded schools and not for federal, state, or private schools. Exploration of underlying mechanisms suggest that resource-based windfalls can have beneficial impacts on the provision of education by increasing educational resources in a municipality.

Keywords: oil royalties, public education, Brazil

JEL Classification: O13, Q33, R53

Suggested Citation

Chan, Jeff and Karim, Ridwan, Oil Royalties and the Provision of Public Education in Brazil (May 12, 2020). Available at SSRN: https://ssrn.com/abstract=3408247 or http://dx.doi.org/10.2139/ssrn.3408247

Jeff Chan (Contact Author)

Wilfrid Laurier University ( email )

75 University Avenue West
Waterloo, Ontario N2L 3C5
Canada

Ridwan Karim

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S3G7
Canada

Wilfrid Laurier University ( email )

75 University Ave W
waterloo, ontario N2L 3C5
Canada

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