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Intergovernmental Grants and Bureaucratic Power

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Author Info
Matz Dahlberg ()
Heléne Lundqvist ()
Eva Mörk ()

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Abstract

In their role as agenda setters and implementers of political decisions, bureaucrats potentially have the power to influence decisions in their own favor. It is however difficult to empirically test whether bureaucrats actually are involved in such actions. In this paper we suggest and apply a new way of testing the hypothesis that bureaucrats can and do in fact affect policy to their own benefit. Making use of a discontinuity in the Swedish grant system, we estimate causal effects of intergovernmental grants on different types of personnel employed by the local governments. On the margin, we find a large, positive effect of grants on the number of bureaucrats in the central administration, but no effects on the number of personnel in other important sectors run by the local government (child care, schools and elderly care). These results support the view that bureaucrats are able to, and do indeed, affect the allocation of grants within municipalities to support own goals.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2430.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2430

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Related research
Keywords: fiscal federalism; grants; bureaucrats; rent seeking; discontinuity analysis;

Other versions of this item:

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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  1. Dewatripont, Mathias & Jewitt, Ian & Tirole, Jean, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," Review of Economic Studies, Blackwell Publishing, vol. 66(1), pages 199-217, January. [Downloadable!] (restricted)
  2. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule To Estimate The Effect Of Class Size On Scholastic Achievement," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 533-575, May. [Downloadable!] (restricted)
  3. Brian Knight, 2002. "Endogenous Federal Grants and Crowd-out of State Government Spending: Theory and Evidence from the Federal Highway Aid Program," American Economic Review, American Economic Association, vol. 92(1), pages 71-92, March. [Downloadable!]
  4. Shapiro, Perry & Sonstelie, Jon, 1982. "Did Proposition 13 Slay Leviathan?," American Economic Review, American Economic Association, vol. 72(2), pages 184-90, May. [Downloadable!] (restricted)
  5. Gordon, Nora, 2004. "Do federal grants boost school spending? Evidence from Title I," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1771-1792, August. [Downloadable!] (restricted)
  6. Mark Duggan & Steven D. Levitt, 2002. "Winning Isn't Everything: Corruption in Sumo Wrestling," American Economic Review, American Economic Association, vol. 92(5), pages 1594-1605, December. [Downloadable!]
    Other versions:
  7. Ott, Mack, 1980. "Bureaucracy, monopoly, and the demand for municipal services," Journal of Urban Economics, Elsevier, vol. 8(3), pages 362-382, November. [Downloadable!] (restricted)
  8. Dahlberg, Matz & Mörk, Eva, 2005. "Public Employment and the Double Role of Bureaucrats," Working Paper Series 2005:3, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  9. Moene, Karl O., 1986. "Types of bureaucratic interaction," Journal of Public Economics, Elsevier, vol. 29(3), pages 333-345, April. [Downloadable!] (restricted)
  10. Dahlberg, Matz & Mörk, Eva & Rattso, Jorn & Ågren, Hanna, 2006. "Using a discontinuous grant rule to identify the effect of grants on local taxes and spending," Working Paper Series 2006:25, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  11. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February. [Downloadable!] (restricted)
  12. Romer, Thomas & Rosenthal, Howard, 1979. "Bureaucrats versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 563-87, November. [Downloadable!] (restricted)
  13. Kjellberg, David & Post, Erik, 2007. "A Critical Look at Measures of Macroeconomic Uncertainty," Working Paper Series 2007:14, Uppsala University, Department of Economics. [Downloadable!]
  14. Bergstrom, Pal & Dahlberg, Matz & Mork, Eva, 2004. "The effects of grants and wages on municipal labour demand," Labour Economics, Elsevier, vol. 11(3), pages 315-334, June. [Downloadable!] (restricted)
  15. David Card & Enrico Moretti, 2007. "Does Voting Technology Affect Election Outcomes? Touch-screen Voting and the 2004 Presidential Election," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 660-673, 04. [Downloadable!] (restricted)
    Other versions:
  16. Jorid Kalseth & Jørn Rattsø, 1998. "Political Control of Administrative Spending: The Case of Local Governments in Norway," Economics and Politics, Blackwell Publishing, vol. 10(1), pages 63-83, 03. [Downloadable!] (restricted)
  17. Romer, Thomas & Rosenthal, Howard & Munley, Vincent G., 1992. "Economic incentives and political institutions: Spending and voting in school budget referenda," Journal of Public Economics, Elsevier, vol. 49(1), pages 1-33, October. [Downloadable!] (restricted)
  18. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
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