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Capital-Intensive Projects Induce More Effort Than Labor-Intensive Projects

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Author Info
Amihai Glazer () (Department of Economics, University of California-Irvine)
Stef Proost () (Center for Economics Studies, Katholieke Universiteit Leuven)

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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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File URL: http://www.economics.uci.edu/docs/2008-09/glazer-13.pdf
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Publisher Info
Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 080913.

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Length: 13pages
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:irv:wpaper:080913

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Postal: Irvine, CA 92697-3125
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Web page: http://www.econ.uci.edu/
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Related research
Keywords: Federalism; Capital subsidies; Transit subsidies;

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Find related papers by JEL classification:
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Acemoglu, Daron & Robinson, James A, 1999. "Inefficient Redistribution," CEPR Discussion Papers 2122, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Amihai Glazer & Vesa Kanniainen, 2007. "Short-term leaders should make long-term appointments," International Tax and Public Finance, Springer, vol. 14(1), pages 55-69, February. [Downloadable!] (restricted)
  3. Dixit, Avinash, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-32, Winter. [Downloadable!] (restricted)
  4. Alesina, Alberto & Tabellini, Guido, 2004. "Bureaucrats or Politicians?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. Pindyck, Robert S, 1991. "Irreversibility, Uncertainty, and Investment," Journal of Economic Literature, American Economic Association, vol. 29(3), pages 1110-48, September. [Downloadable!] (restricted)
    Other versions:
  6. Glazer, Amihai, 1989. "Politics and the Choice of Durability," American Economic Review, American Economic Association, vol. 79(5), pages 1207-13, December. [Downloadable!] (restricted)
  7. Allan Drazen & Nuno Limão, 2008. "A Bargaining Theory Of Inefficient Redistribution Policies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 621-657, 05. [Downloadable!] (restricted)
  8. Allan Drazen & Nuno Limão, 2004. "Government Gains from Self-Restraint: A Bargaining Theory of Inefficient Redistribution," NBER Working Papers 10375, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. K. Obeng & R. Sakano, 2000. "The Effects of Operating and Capital Subsidies on Total Factor Productivity: A Decomposition Approach," Southern Economic Journal, Southern Economic Association, vol. 67(2), pages 381-397, July.
  10. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-35, December. [Downloadable!] (restricted)
  11. Gary S. Becker & Casey B. Mulligan, 1998. "Deadweight Costs and the Size of Government," NBER Working Papers 6789, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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