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The effects of partisan alignment on the allocation of intergovernmental transfers. Differences-in-differences estimates for Spain

  • Solé-Ollé, Albert
  • Sorribas-Navarro, Pilar

In this paper we test the hypothesis that municipalities aligned with upper-tier grantor governments (i.e., controlled by the same party) will receive more grants than those that are unaligned. We use a rich Spanish database, which provides information on grants received by nearly 900 municipalities during the period 1993-2003 from three different upper-tier governments (i.e., Central, Regional and Upper-local). Since three elections were held at each tier during this period, we have enough within-municipality variation in partisan alignment to provide differences-in-differences estimates of the effects of alignment on the amount of grants coming from each source. Moreover, the fact that a municipality may simultaneously receive grants from aligned and unaligned grantors allows us to use a triple-differences estimator, which consists of estimating the effects of changing alignment status on the change in grants coming from the aligned grantors relative to the change in grants coming from the unaligned ones. The results suggest that partisan alignment has a sizeable positive effect on the amount of grants received by municipalities. For example, with majority governments at the two layers, aligned municipalities receive over 40% more grants than unaligned ones.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 92 (2008)
Issue (Month): 12 (December)
Pages: 2302-2319

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Handle: RePEc:eee:pubeco:v:92:y:2008:i:12:p:2302-2319
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  13. Strömberg, David, 2002. "Optimal Campaigning in Presidential Elections: The Probability of Being Florida," Seminar Papers 706, Stockholm University, Institute for International Economic Studies.
  14. Johansson, Eva, 2003. "Intergovernmental grants as a tactical instrument: empirical evidence from Swedish municipalities," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 883-915, May.
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