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Effect of central transfers on municipalities’ own revenue mobilization: Do conflict and local revenue management matter?

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  • Jean-François BRUN

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Tiangboho SANOGO

Abstract

This paper analyzes the effect of the transfers from central government to municipalities on the revenue mobilization by municipalities in Côte d’Ivoire over the period 2001-2014. The analysis is based on a new carefully-constructed dataset covering the conflict and post conflict periods for 115 municipalities. A two-stage least squares estimator is combined with the Grouped Fixed Effects estimator to address a potential endogeneity bias and to allow for unobserved heterogeneity varying over time. The results show a statistically significant and positive effect of central transfers on revenue mobilization by municipalities for both tax revenue and non-tax revenue. The effect of transfers is found to be higher for tax revenue than for non-tax revenue. The conflict eroded the capacity of municipalities to raise revenue. During the conflict, a 10 percent increase in transfers is associated with a 3.3 percent increase in revenue mobilized by municipalities, while this increase reaches 5.9 percent after the conflict.

Suggested Citation

  • Jean-François BRUN & Tiangboho SANOGO, 2017. "Effect of central transfers on municipalities’ own revenue mobilization: Do conflict and local revenue management matter?," Working Papers 201716, CERDI.
  • Handle: RePEc:cdi:wpaper:1888
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    References listed on IDEAS

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    1. Jean-François Brun & Maria El Khdari, 2016. "The Incentive Effects of Conditional and Unconditional Transfers on Local Own Revenue Generation: Empirical Evidence from Moroccan Municipalities," Working Papers halshs-01285021, HAL.
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    Cited by:

    1. Erman,Alvina Elisabeth & Solis Uehara,Carla Cristina & Beaudet,Chloé, 2021. "Leveling Up : Impacts of Performance-Based Grants on Municipal Revenue Collection in Mozambique," Policy Research Working Paper Series 9789, The World Bank.
    2. Tiangboho Sanogo, 2019. "Does fiscal decentralization enhance citizens’ access to public services and reduce poverty? Evidence from Côte d’Ivoire municipalities in a conflict setting," Post-Print hal-01875189, HAL.
    3. Sanogo, Tiangboho, 2019. "Does fiscal decentralization enhance citizens’ access to public services and reduce poverty? Evidence from Côte d’Ivoire municipalities in a conflict setting," World Development, Elsevier, vol. 113(C), pages 204-221.

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    More about this item

    Keywords

    Municipality; Own revenue; Fiscal decentralization; Grouped fixed effect; Conflict; Côte d’Ivoire.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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