Local inequality and project choice : theory and evidence from Ecuador
AbstractThis paper provides evidence consistent with elite capture of Social Fund investment projects in Ecuador. Exploiting a unique combination of data-sets on village-level income distributions, Social Fund project administration, and province level electoral results, the authors test a simple model of project choice when local political power is unequally distributed. In accordance with the predictions of the model, poorer villages are more likely to receive projects that provide excludable (private) goods to the poor, such as latrines. Controlling for poverty, more unequal communities are less likely to receive such projects. Consistent with the hypothesis of elite capture, these results are sensitive to the specific measure of inequality used in the empirical analysis, and are strongest for expenditure shares at the top of the distribution.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3997.
Date of creation: 01 Aug 2006
Date of revision:
Rural Poverty Reduction; Economic Theory&Research; Population Policies; Services&Transfers to Poor; Poverty Monitoring&Analysis;
Other versions of this item:
- Araujo, M. Caridad & Ferreira, Francisco H.G. & Lanjouw, Peter & Özler, Berk, 2008. "Local inequality and project choice: Theory and evidence from Ecuador," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1022-1046, June.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-11 (All new papers)
- NEP-DEV-2006-09-11 (Development)
- NEP-LAM-2006-09-11 (Central & South America)
- NEP-POL-2006-09-11 (Positive Political Economics)
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