RESEARCH

WORKING PAPERS

1. Tordesillas, Slavery and the Origins of Brazilian Inequality, co-authored with Thomas Fujiwara and Felipe Valencia

Although the negative impact of slavery has been documented for exporting African nations, less is known about the long-term impact of this institution in receiving nations. This article examines the long-term effects of slavery on the receiving end of the spectrum, by focusing on Brazil, one of the largest importers of slaves and the last country to abolish this institution in the Western Hemisphere. To deal with the endogeneity of slavery placing, we use a spatial Regression Discontinuity framework, exploiting the colonial boundaries between the Portuguese and Brazilian empires in current day Brazil. We find that the number of slaves in 1872 is discontinuously higher in the Portuguese side of the border, consistent with this power’s comparative advantage in this trade. We then show how this differential slave rate has led to higher income inequality of 0.103 points (Gini coefficient), approximately 20% of average income inequality in Brazil. To further investigate the role of slavery on economic development, we use the division of the Portuguese colony into Donatary Captancies. We find that a 1% increase in slavery in 1872 leads to an increase in inequality of 0.112. Aside from the general effect on inequality, we find that more slave intensive areas have higher income and educational racial imbalances and worse public institutions today.

2. From Telegraphs to Space: Transport Infrastructure, Development and Deforestation in the Amazon

In this article, I exploit a source of quasi-random variation in observed infrastructure and develop a historical route opened by the Rondon Commission (1915-1917) as an instrumental variable strategy to investigate the impact of a national highway on the development of the Amazon region. Furthermore, I also explore potential transmission mechanisms, such as deforestation. My empirical tests rely on three data sources: night-time satellite data, census micro-data and deforestation satellite data. Using night-time satellite data, I find that for each kilometer’s distance away from highway, the income of a pixel (0.86 km2) captured by the intensity of night-time light decreases by 0.10%. Transport infrastructure has also affected deforestation in the Amazon, open new frontiers for cattle farming and soybean agriculture. For each kilometer’s distance away from highway BR-364, the average percentage of trees per pixel increases from 5% to 9%, while this coefficient for census group data varies from 2% to 9%. I also observe that in indigenous areas the forest coverage by pixel is 24% larger in relation to other areas.

3. Ready to Tax: What Happens When Brazilian Municipalities Invest in Fiscal Capacity?

While the theme of fiscal capacity has gained increased attention in academia, there is little empirical evidence of its impact on development outcomes. This paper contributes to the existing literature by measuring the causality of investments in fiscal capacity of urban property taxes on development and political outcomes. The results show that investing in fiscal capacity increases property tax revenues per capita and property tax revenues over total revenue, as well as increases the provision of public goods that improve welfare, while it has no impact on the re-election of the municipalities’ mayors. I use a combination of the propensity score matching and difference-in-differences (DD) methodologies and find that investments in tax maps, for instance, increase property tax revenues by US$ 1.3 to US$ 1.6 per capita annually, given that the average property tax revenue per capita of the full sample is US$ 9.34. The results also show that the number of households where waste is collected increases 2,210 when a municipality invests in digital tax map in comparison to those that do not. Municipalities that invested in digital real estate database and digital tax map increases the vaccination coverage by 3.3 to 10.8% in comparison to those that did not. For political outcomes, I do not find evidence that investments in fiscal capacity affects re-election. Therefore, the political costs of investing in fiscal capacity might be counter-balanced by the benefits of the higher delivery of public goods.

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© Humberto Laudares 2018