Essays in Public Economics and Development

The present thesis studies public economics questions in the context of developing countries. In particular, I investigate the impact and design of specific government policies in Brazil. Government interventions may be desirable when unregulated market economies deliver socially inefficient outcomes. Goods and services tend to be under-provided in the presence of imperfect or asymmetric information. Such market failures may be pervasive in the insurance market and prompt governments to provide certain types of insurance directly. Chapters 1 and 2 study social insurance programs, and more specifically unemployment insurance (UI). In contrast, goods and services tend to be over-provided if they generate negative externalities. In recent years, there has been a lot of interest in the negative externalities associated with energy consumption. Chapter 3 studies energy conservation policies, and more specifically residential electricity conservation. In each of the three essays, I develop a simple theoretical framework to guide my empirical analysis. I then estimate the relevant impacts and combine theory and empirics to inform the design of government programs.;There is vast literature in public economics (and related fields) on social insurance programs and energy conservation policies. Yet, as for most research in public economics, existing work focuses almost entirely on the context of developed countries. Arguably, social insurance and energy conservation are not first-order priorities in least developed countries. However, these topics are becoming increasingly relevant for developing countries. Most of the growth in energy demand is forecast to come from the developing world, especially for residential consumers. Social insurance programs have been adopted in a growing number of developing countries. Currently some form of UI exists in Algeria, Argentina, Barbados, Brazil, Chile, China, Ecuador, Egypt, Iran, Turkey, Uruguay, Venezuela and Vietnam; Mexico, the Philippines, Sri Lanka, and Thailand have been considering its introduction. Moreover, the severe data constraints that limited empirical work at the intersection of public and development economics are being removed. Today, large administrative datasets and high-quality surveys are available in many developing countries.;If there is little evidence on the impact of social insurance programs in developing countries, there is almost no evidence on the impact of energy conservation policies. Moreover, results from more advanced countries are also unlikely to translate easily to the context of developing countries. Households in the developing world own fewer appliances and consume much less energy on average. Average monthly residential electricity consumption in Brazil was below 200 kilowatt hours in 2000. Enforcement is also a major challenge. Electricity theft amounts to 15% of the total load for some utilities in Brazil. In the third chapter, I investigate the short- and long-term impacts on residential consumption of the largest electricity conservation program to date. This was an innovative program of economic (fines) and social (conservation appeals) incentives implemented by the Brazilian government in 2001–2002 in response to supply shortages of over 20%.;Achieving ambitious energy conservation targets through economic incentives is often considered infeasible. Yet, there is little evidence from ambitious conservation policies. I find that the Brazilian conservation program reduced average electricity consumption per customer by .25 log point during the nine months of the crisis. Importantly, the program induced sizable lumpy adjustments; it reduced consumption by .12 log point until at least 2011. Using individual billing data from three million customers, I show that average effects came from dramatic reductions by most customers. I also provide suggestive evidence that lumpy adjustments came from new habits rather than physical investments. Finally, I structurally estimate a simple model to quantify the role of social incentives and lumpy adjustments. Social incentives amounted to a 1.2 log point increase in electricity tariffs, and may thus be particularly powerful in times of crisis. Importantly, a .6 log point permanent increase in tariffs would have been necessary to achieve the observed consumption levels during and after the crisis absent any lumpy adjustment. The possibility of triggering lumpy adjustments may thus substantially reduce the incentives necessary to achieve ambitious energy conservation targets.;Beyond the specific issues it addresses, I hope that this dissertation will help convince senior and junior scholars alike of the relevance and feasibility of academic research at the intersection of public and development economics. More work is deeply needed.