Are Rules-based Government Programs Shielded from Special-Interest Politics? Evidence from Revenue-Sharing Transfers in Brazil
AbstractManipulation of government finances for the benefit of narrowly defined groups is usually thought to be limited to the part of the budget over which politicians exercise discretion in the short run, such as earmarks. Analyzing a revenue-sharing program between the central and local governments in Brazil that uses an allocation formula based on local population estimates, I document two main results: first, that the population estimates entering the formula were manipulated and second, that this manipulation was political in nature. Consistent with swing-voter targeting by the right-wing central government, I find that municipalities with roughly equal right-wing and non-right-wing vote shares benefited relative to opposition or conservative core support municipalities. These findings suggest that the exclusive focus on discretionary transfers in the extant empirical literature on special-interest politics may understate the true scope of tactical redistribution that is going on under programmatic disguise.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 483.
Date of creation: Jul 2010
Date of revision:
Bureaucracy; institutions; redistributive politics; electoral competition;
Find related papers by JEL classification:
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
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