When a Town Wins the Lottery: Evidence from Spain

Abstract

For over a century, Spain has conducted a national lottery which often results in the random allocation of large cash windfalls to one town. Leveraging data on lottery ticket expenditures, we match winning towns to non-winning towns with equal winning probability. For towns that won in recent decades, consumption of durables increases while employment, businesses, and migration
to the town decrease. An analysis of a century of winners reveals a stark and persistent population increase for towns that won after the Civil War. Our results suggest a limited role for wealth shocks in spurring economic growth outside of large recessions.

Keywords: Wealth shocks, economic recession, randomized natural experiment

JEL Classification: N33,J11,H31