Diogo Baerlocher

Diogo Baerlocher

Associate Professor of Economics at the University of South Florida

  • PhD Economics - University of Illinois
  • Macroeconomic Development & Public Economics

    • Curriculum Vitae

    I’m an Associate Professor of Economics at the University of South Florida. My research asks why living standards differ across places, groups, and time, and I come at that question from both the aggregate and the individual side. My focus has been on labor market dynamics, the spatial reallocation of people and activity and political behavior. Much of my work is set in Brazil and identified off historical episodes.

    Working Papers

    Abstract: Using machine learning-based facial analysis and data on approximately 520,000 candidates for local office in Brazil, we study how self-reported racial identity relates to phenotypic appearance, socioeconomic characteristics, and local social context. A Shapley-Owen decomposition reveals that municipality fixed effects explain more variation in self-reported race than appearance, and their relative importance rises sharply among individuals with racially ambiguous phenotypes. Socioeconomic factors such as education exhibit ``social whitening'' effects concentrated among ambiguous individuals. Local social context has deep historical roots: areas with higher slave population shares in 1872 exhibit stronger norms favoring white self-identification, especially among the phenotypically ambiguous. A mediation analysis reveals that contemporary racial composition---but not economic channels---accounts for a substantial share of this association.

    Abstract: When natural disasters strike, the impact on housing markets can be far-reaching. This paper explores the unique dynamics of natural disaster-induced migration on the housing market, focusing on the 1930s Dust Bowl migration to Los Angeles--the top migrant destination. We use U.S. Census-linked and geocoded address data to document that the arrival of Dust Bowl migrants significantly impacted the city's housing market. We show that houses inhabited by Dust Bowl migrants had lower price growth over the decade. Critically, we uncover valuation spillovers within highly granular neighborhoods, where houses inhabited by non-migrants experienced lower price growth modulated by how close they were to Dust Bowl migrants. Our analysis of potential mechanisms suggests that these effects were primarily driven by the economic vulnerability of migrants rather than generalized discrimination. Our research contributes to understanding how natural disaster-induced migration shapes housing markets and the dimensions in which climate refugees differ from other migrants.

    Abstract: We study the long-term effects of childhood exposure to malaria on adult mortality in Brazil. We exploit the malaria eradication campaign in Brazil as a natural experiment to identify exogenous sources of variation in the decline in malaria rates according to pre-campaign endemicity rates in different regions. We find a positive treatment effect of early-life exposure to malaria on adult mortality rate. Our results further suggest a potential direct physiological effect from malaria exposure as well as a potential indirect effect through lower educational attainment.


    Peer-Reviewed Publications

    Working Paper Working Paper Replication Files

    Abstract: Following the discovery of gold in 1694 in Brazil, pathways were constructed to connect coastal settlements to mining regions in the unpopulated interior. While these pathways initially facilitated the creation of road towns, their influence faded by the late nineteenth century. With the mid-twentieth-century demographic and industrial transition, regions with higher historical road density experienced renewed population growth and greater migrant inflows. We argue that this resurgence reflects the role of road towns in supporting early urbanization and structural transformation. Using an extended Rosen-Roback-Glaeser framework, we estimate strong agglomeration spillovers, consistent with Brazil's spatial economy exhibiting multiple steady states and possible historical path dependence.

    Working Paper Replication Files Google Scholar

    Abstract: This paper examines how racial self-classification among elected officials influences public sector hiring in Brazil. We focus on misaligned white candidates---those who self-identify as white but are unlikely to be classified as such by facial classification algorithms---and exploit close electoral races for municipal councils using a regression discontinuity design. Narrow victories by these candidates reduce the share of nonwhite hires in municipal legislative offices by approximately 20% relative to the average. The effect appears in the public sector but not in the private sector, and is more pronounced among temporary workers, over whom elected officials have greater hiring discretion. A decomposition by counterfactual type suggests the effect is driven by differences among white-identified candidates rather than by the displacement of nonwhite officeholders. Our findings are robust to propensity score matching, an ex ante candidate selection strategy that addresses order-statistics bias in multi-member elections, and a range of alternative specifications.

    Working Paper Google Scholar

    Abstract: This paper investigates the relationship between labor regulation and the skill composition of the workforce. Using a quantitative model calibrated to U.S. data, I show that labor market frictions induced by regulation have contrasting effects on different types of workers and across time horizons. Increases in vacancy posting costs reduce welfare for both skilled and unskilled workers, but they raise wages for the unskilled while lowering wages for the skilled. Similarly, policies that strengthen workers' bargaining power tend to benefit unskilled workers but impose costs on skilled workers through reduced earnings and firm profitability. On the empirical side, I exploit health improvements as an instrument for the share of skilled workers to estimate a causal relationship between workforce composition and labor regulation. The findings indicate that countries with larger shares of skilled workers tend to adopt less stringent labor regulations, highlighting how shifts in human capital can shape institutional outcomes.

    Working Paper Google Scholar

    Abstract: This paper explores the connection between natural disasters and protests against autocratic regimes, using data from the 1979-1983 drought in Brazil's semi-arid region. We measure drought severity using deviations from historical water deficit means obtained from meteorological ground stations. Results indicate that adverse weather conditions have a negative impact on protests against the military regime. Additionally, disaster relief, income inequality, and social vulnerability measures do not show significant effects as potential mechanisms. However, we observe heterogeneous effects among areas with different shares of irrigated farmland, suggesting that economic vulnerability may be a driving factor behind the results.

    Working Paper Google Scholar

    Abstract: This paper constructs two models of financial exclusion to assess the welfare costs of inflation. In the first, inflation costs are measured within a classical endowment economy. The second includes a production sector and costly credit. Both models are calibrated to account for inflation costs in a high-inflation economy (developing country) and in a low-inflation economy (developed economy). In an endowment economy, when inflation is reduced from 1.5% to zero in a developed economy, the welfare costs for agents with (without) financial access are 0.38% (0.43%) consumption equivalent variation (CEV). In a model with costly credit, the welfare costs for agents with (without) financial access are 0.87% (1.3%) CEV. For developing countries, when inflation is reduced from 3.2% to zero, the welfare costs for agents with (without) financial access are 0.72% (2.56%) in an endowment economy. In the costly-credit model, the welfare costs for agents with (without) financial access are 0.3% (3.1%) CEV. The main finding is that there is a substantial asymmetry in welfare costs between individuals with and without access to financial services, especially in developing countries.

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    Abstract: This paper shows that there is an inverted U-shaped relationship between public employment and economic growth. The government allocates workers to the production of public goods, which reduces operational costs, increasing the number of firms in the market, and creating incentives to innovate. Conversely, large public sectors crowd out the labor market, reducing the number of firms and the incentives to innovate. An extension of the model shows that the average human capital of public workers has the same relationship with economic growth. Therefore, even countries with small public sectors can hinder economic growth by hiring many high-productivity workers. The paper also provides empirical evidence of an inverted U-shaped correlation between the share of public workers and economic growth using data from the Worldwide Bureaucracy Indicator and the Penn World Tables. Numerical exercises show that the model replicates the inverted U-shaped relationship between public employment and economic growth found in the data.

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    Abstract: Borrowing from the demographic dividend literature, this paper examines whether there is a gender bonus, namely an increase in the average living standard associated with increases in female labor force participation (FLFP) rates. Translating a per worker production function into a per capita one, it derives a linear dynamic model, the coefficient of which can be used to test for the existence of a gender bonus, and the reasons for this bonus. Using an international panel and applying a system GMM approach, it finds a positive and statistically significant effect of the growth of FLFP on economic growth and a positive but not statistically different from zero effect of the initial FLFP on economic growth. Importantly, we cannot reject the hypothesis that either of these effects is merely an accounting effect, namely a consequence of having more workers in the economy and more aggregate output. It finds no support for a secondary bonus through education or population growth.

    Working Paper Google Scholar

    Abstract: This paper provides evidence of alignment effects between the executive and the legislative branches of the central government. We rely on detailed data on Brazilian intergovernmental grants whose allocations are determined by legislators. The executive branch cannot interfere with the destinies or volumes of grants, but it can control the transfer pace. We group the data into municipalities and estimate the effects of the share of aligned legislators associated with a municipality on the average time to receive grants. We show that legislators politically aligned to the executive branch transfer resources to their constituencies nine months faster than unaligned legislators. To achieve a causal interpretation of these results, we rely on exogenous variations in the shares of elected aligned legislators caused by the phased-in introduction of electronic voting. Our findings regarding how political alignment affects the speed of transfer are consistent across different periods and alternative definitions of the dependent variable.

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    Abstract: In this paper we seek to understand the recent dynamics of the Brazilian housing market, which experienced a significant growth in recent years. In particular, we assess the effects of aggregate productivity and monetary policy shocks on housing market variables. Moreover, we also investigate the effects of shocks to housing prices that are orthogonal to business cycle movements. We use a SVAR approach with sign restriction backed by a Dynamic Stochastic General Equilibrium (DSGE) model estimated for Brazil. The empirical results show that the housing market responds positively to aggregate productivity shocks, while a contractionary monetary policy shock depress housing output, demand and prices. Additionally, we find monetary policy as an important source of variation in housing prices and financing, while productivity shocks explain a substantial share of housing production movements. We also show that the behavior of housing prices is mostly driven by shocks to housing prices that are orthogonal to business cycles movements.

    Working Paper Replication Files Google Scholar

    Abstract: Exploiting heterogeneity across Brazilian micro-regions over the 1970–2000 period, this paper examines whether the demographic dividend extends beyond a pure accounting effect. Using a Sys-GMM approach, it finds evidence that changes in age structure have only pure accounting effects after controlling for human capital. Therefore, in the case of Brazilian micro-regions, there is a second demographic dividend, which is associated with education. This second dividend is the far more important of the two dividends in terms of economic growth. In a counterfactual exercise, we show that the accounting effect is responsible for less that 10% of the income gap between the poorest and richest regions in Brazil.

    Google Scholar

    Abstract: This paper implements a structural vector auto regression (SVAR) analysis to investigate the impacts and importance of fiscal shocks on the dynamics of the real exchange rate and the trade balance in three emerging economies: Brazil, Chile and Mexico. We show that the effects of an unexpected increase in government spending are not uniform across countries with higher spending leading to a depreciation of the real exchange rate in Brazil and Chile, whereas in Mexico, we observe an appreciation. The trade balance deteriorates in all three countries. We also report that an unexpected increase in taxes leads to recessionary impacts and improves the trade balance. Only in Mexico is there evidence of a real exchange rate depreciation. Finally, we show that fiscal shocks account for roughly 20% of real exchange fluctuations.


    Peer-Reviewed Publications (Portuguese)


    Teaching

    University of South Florida
    Intermediate Macroeconomics (undergraduate)
    Economic Growth (undergraduate)
    Macroeconomics II (graduate)

    University of Illinois
    Economic Growth (undergraduate)