Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/308323 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17464
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We use plausibly exogenous variation in the redistribution of natural resource tax revenues in Peru to study whether transfers to local governments can stimulate economic activity in low-income areas. We show that resource windfalls to non-extractive municipalities between 2006 and 2018 changed the size and composition of local government expenditures and had effects on local labor markets and household welfare. We find an increase in labor force participation and private employment, earnings, and formality. The windfalls spur improvements in sectors that do not directly serve municipalities and especially benefit poorer rural areas, which experienced significant increases in household income and consumption, along with a decline in poverty.
Subjects: 
government transfers
labor markets
rural economies
multiplier
Peru
JEL: 
H
O
N56
Document Type: 
Working Paper

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