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Manager or professional politician? Local fiscal autonomy and the skills of elected officials

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  • Bordignon, Massimo
  • Gamalerio, Matteo
  • Turati, Gilberto

Abstract

We provide a theoretical and empirical assessment of why local fiscal autonomy can affect the skills of elected officials in sub-national governments. We first develop a model of politics with different types of politicians and show that – following a tax decentralization reform increasing local fiscal autonomy – politicians with high administrative skills are elected in rich jurisdictions while politicians with high political skills are elected in poor ones. As a result, voter welfare increases only, or mainly, in rich jurisdictions. We then look for empirical support to these predictions by exploiting the decentralization reforms affecting Italian municipalities in the '90s. These reforms introduced both the direct election of the mayor and new autonomous tax tools for municipalities characterized by large differences in their tax bases. Our estimates – robust to several alternative stories – emphasize a differential change in elected officials at the municipal level between rich and poor jurisdictions. These findings provide a new explanation for the observed poor performance of local governments largely financed by grants.

Suggested Citation

  • Bordignon, Massimo & Gamalerio, Matteo & Turati, Gilberto, 2020. "Manager or professional politician? Local fiscal autonomy and the skills of elected officials," Regional Science and Urban Economics, Elsevier, vol. 83(C).
  • Handle: RePEc:eee:regeco:v:83:y:2020:i:c:s0166046219302121
    DOI: 10.1016/j.regsciurbeco.2020.103529
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    4. Davide Cipullo, 2023. "When Women Take All: Direct Election and Female Leadership," CESifo Working Paper Series 10229, CESifo.
    5. Morelli, Massimo & Gamalerio, Matteo & Negri, Margherita, 2020. "Immigration, Occupational Choice and Electoral Rules Theory and Evidence on Dual Ballot Openness," CEPR Discussion Papers 14896, C.E.P.R. Discussion Papers.
    6. David Bartolini & Agnese Sacchi & Domenico Scalera & Alberto Zazzaro, 2023. "Voters’ Distance, Information Bias and Politicians’ Salary," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 637-664, July.
    7. Nakatani, Ryota & Zhang, Qianqian & Garcia Valdes, Isaura, 2023. "Health Expenditure Decentralization and Health Outcomes: The Importance of Governance," MPRA Paper 118062, University Library of Munich, Germany.
    8. Gamalerio, Matteo & Trombetta, Federico, 2021. "Fiscal Rules and the selection of politicians : theory and evidence from Italy," QAPEC Discussion Papers 10, Quantitative and Analytical Political Economy Research Centre.
    9. Gamalerio, Matteo, 2020. "Do national political parties matter? Evidence from Italian municipalities," European Journal of Political Economy, Elsevier, vol. 63(C).
    10. Nicolas Guadalupe Zuniga-Espinoza & Narce Dalia Reyes Perez, 2022. "Income of the Local Public Treasury in Mexico," Technium Social Sciences Journal, Technium Science, vol. 38(1), pages 264-278, December.
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    More about this item

    Keywords

    Decentralization; Skills of politicians; Fiscal autonomy;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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