Working Papers

Winning and Losing the Resource Lottery: Governance after Uncertain Oil Discoveries
Working Paper   Slides   World Bank Development Impact Blog

Natural resource discoveries lead to anticipation, uncertainty, and potentially large revenue windfalls for local governments. I leverage exogenous subnational variation in offshore oil discoveries in Brazil to identify dynamic effects of news and revenue shocks on local public finances, public goods provision, and politics. Municipalities where discoveries are realized enjoy significant growth in revenues and spending, but fail to improve public goods provision or stimulate local economic activity. Municipalities that experience discovery news shocks but never receive windfalls suffer long-term declines in revenues, investment, and public goods provision relative to never-treated controls. I show that electoral responses underlie these dynamics: discovery announcements draw less-educated candidates into local politics, and shortfalls between anticipated and realized oil revenues increase political turnover. These findings highlight the importance of accounting for heterogeneity in discovery realizations, and reveal mismanagement of windfalls and adjustment costs after disappointment as two faces of the Resource Curse.

Timing is Everything: Labor Market Winners and Losers during Boom-Bust Cycles
(with Dominic Parker and Steven Poehlekke)
Working Paper   Slides (English)   Slides (Portuguese)   Ipea Webinar (Portuguese)

Sectoral expansions and contractions require labor reallocation between declining and booming sectors. Which types of workers gain and lose during these transitions? Using linked employer-employee panel data from Brazil spanning a boom-bust cycle in its oil and gas sector, we find that timing of labor market entry is critical. Only highly educated workers hired at the onset of a boom reap significant earnings and employment benefits. Low-education workers and later entrants experience earnings and employment penalties, reflecting a last-in, first-out pattern. We show the boom induced rapid growth in sector-specific education and a mistimed glut of specialized graduates, dissipating earnings.

The Political Economy of Tropical Land Use: Property-Level Evidence from the Amazon (with Fanny Moffette)
Working Paper

We combine individually-identified land cadasters, registries of political candidates and campaign donors, and remote sensing data to construct a novel twenty-year panel of land use change on properties belonging to municipal politicians and donors in the Brazilian Amazon. Estimating event studies around close mayoral elections, we find that winning candidates -- and their campaign donors -- increase soy cultivation while the candidate is in office, suggesting local political connections help landholders overcome barriers to adoption for this high-value crop. At the municipal-level, close election of a mayor with personal landholdings has no effect on land use or environmental outcomes, but election of a mayor who received campaign donations from landholders leads to increased soy cultivation, deforestation, and environmental violations. Landholder-financed mayors weakly increase municipal spending on agricultural promotion and oversee expansion of rural credit. Results reveal a channel of "land-use patronage" and highlight interconnections between local politics, land use, and environmental governance.

Quantifying the Effects of Fracking and Wind Turbines on Bird Populations and Biodiversity
Working Paper

Shale oil and gas production and wind energy generation both expanded rapidly across the United States between 2000-2020, raising concerns over impacts on wildlife. I combine longitudinal micro-data from the National Audubon Society’s Christmas Bird Count with geolocated registries of all wind turbines and shale wells constructed during this period to estimate the effects of these energy land-use changes on bird populations and biodiversity, which are key bellwethers of ecosystem health. Results show that the onset of shale oil and gas production reduces subsequent bird population counts by 16% -- or 4.25 birds per well drilled -- even after adjusting for location and year fixed effects, weather, and counting effort. Wind turbines do not have any measurable impact on bird counts. Negative effects of shale are not driven by changes in human population, and are larger when wells are drilled within important bird habitats.

Work in Progress

Can Natural Resources Promote Industrialization? Firms, Competition, and Spillovers from an Industrial Policy

Click for Abstract Industrial policies are hotly debated, but empirical evidence of their efficacy and underlying mechanisms is thin. I evaluate a common industrial policy–a local content requirement (LCR)–which requires multinational firms to source a percentage of their inputs from local suppliers. Using firm-level panel data from Brazil, I measure whether an LCR for the oil sector increased manufacturing firm growth, innovation, and productivity among upstream input-suppliers, or instead led to rent-seeking and inefficiencies. Competition is a primary mechanism underlying successful industrial policies. I measure whether targeted firms in more competitive subsectors exhibit higher productivity growth relative to firms in less competitive subsectors after introduction of the policy. Another justification of industrial policies is their potential to create positive spillovers. By measuring supply-chain linkages and distance between targeted and non-targeted firms, I estimate spillover effects of the LCR on the broader manufacturing sector. Finally, I leverage data on campaign donations made by LCR beneficiary firms and firm owners to explore the role of special interest politics in sustaining the LCR.

Skills or Scars? The Legacy of Mining Booms on Firm and Worker Capabilities

Pipelines, Crime, and Local Development in Mexico (with Itzel de Haro Lopez)

Peer-Reviewed Publications

The Relation Between Labor Productivity and Wages in Brazil: A Sectoral Analysis
Erik S. Katovich and Alexandre Gori Maia
Nova Economia, Vol. 28, No. 1, pp. 7-38 (2018)
PDF   Published Version

Click for Abstract Labor productivity is a crucial long-run determinant of real wages. Nonetheless, wage and productivity dynamics often diverge in practice due to a range of economic and institutional factors. This study analyzes the relation between the dynamics of labor productivity and wages in Brazil from 1996 to 2014, and adopts a sectoral perspective to account for divergent trends among economic sectors. Analyses are based on pooled data drawn from the National Accounts and the Pesquisa Nacional por Amostra de Domicílios, and hierarchical data models are estimated to assess the impacts of state- and sector-level factors on individuals’ wages. Results indicate that productivity is significantly positively associated with wage levels for all economic sectors, but that institutional factors such as labor formalization and minimum wage exert equally significant impacts, suggesting that wage growth over the 1996-2014 period was as much the result of institutional changes as of transformation of Brazil’s productive structure.

Are GMO Policies “Trade Related”? Empirical Analysis of Latin America
Pamela J. Smith and Erik S. Katovich
Applied Economic Perspectives and Policy, Vol. 39, No. 2, pp. 286-312 (2017)
Published Version

Click for Abstract This paper empirically examines whether GMO policies are “trade related” for countries in Latin America (LA). First, we use the Balassa index to assess the “revealed comparative advantage” of LA countries. We find that LA countries have a revealed comparative advantage in GMO industries relative to the world, and that intra-regional trade in these industries is modest relative to external trade. Second, we estimate the Gravity model to examine the effects of importers’ GMO policies on Argentina and Brazil’s bilateral exports of soybeans and maize. We find that strong GMO policies in importers have a negative effect on Argentina’s bilateral exports of soybeans (an industry and country with historically high GMO content). Further, we find that past GMO policies are a strong determinant of Argentina’s future bilateral exports, and that the negative trade effects of strong GMO policies are increasing over time. In contrast, we find a weaker relationship between the GMO policies of importers and Brazil’s bilateral exports (consistent with Brazil’s more recent increases in GMO content). These findings for Argentina and Brazil provide a benchmark for other developing countries that are looking for guidance on servicing trading partners with diverse GMO policies.