Essays in applied economics : evidence from Brazil

• Main Author: Costa, Francisco
• Published: London School of Economics and Political Science (University of London) 2013
• Subjects: 330.01; HB Economic Theory
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.587449

This thesis contains three essays. In the first essay, I examine whether a temporary policy can affect long-run house hold behavior. I look at evidence from a nine-month compulsory rationing imposed on Brazilian households’ electricity use in 2001, exploiting differences in the policy’s implementation across regions as a quasi-experiment to test its short-and long-run impacts on households’ electricity consumption patterns. I find that the rationing program led to a persistent reduction in electricity use of 14% even ten years later. Unique household level microdata on appliance ownership and consumption habits suggest that the main source of persistence is changes in the utilization of electricity services, rather than technology adoption. In the second essay, we examine the effects of China’s recent emergence into the world economy in local labour markets in Brazil. Much of the literature have viewed China as a competitor. However, China is also an increasingly large consumer of goods produced abroad, and an increasing share of its import demand is for primary goods. Using census data, we compare trends in migration, unemployment, employment structure (primary/manufacturing/services), informality and participation on Bolsa Família program in areas affected by the ‘China competition shock’ and the ‘China demand shock’. We find significant and heterogeneous effects from these two ‘shocks’. In the third essay, we employ an unified theoretical framework to structurally estimate the effect of changes within China on the production in Brazil and in the rest of the world. Based on the Ricardian model of trade of Costinot et al. (2012), we perform counterfactuals exercises to analyze how countries and industries in Brazil would have performed in the absence of the recent Chinese ascension. Results suggest that changes in China’s comparative advantage hampered manufacturing sector abroad. We find no support for the idea of China demand (taste) shock towards raw materials.