Capital-intensive projects induce more effort than labor-intensive projects

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Capital-intensive projects induce more effort than labor-intensive projects

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Amihai GLAZER
Stef PROOST

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Abstract

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials. a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.

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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0831.

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Date of creation: Dec 2008
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Handle: RePEc:ete:ceswps:ces0831

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Paper
- Amihai Glazer & Stef Proost, 2008. "Capital-Intensive Projects Induce More Effort Than Labor-Intensive Projects," Working Papers 080913, University of California-Irvine, Department of Economics. [Downloadable!]

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-01-17 (All new papers)

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