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Political Yardstick Competition in Local Public Expenditure Decisions: Evidence from Korean Municipalities

Author

Listed:
  • NA YOUNG KIM

    (School of Public Administration & Media, Mokpo National University)

  • KWANG BIN BAE

    (Department of Public Administration, Dongguk University, Seoul, South Korea)

Abstract

Applying yardstick competition theory, this study examines how the spending decisions of local governments in Korea are influenced by neighboring jurisdictions, particularly in the context of electoral competition. Using spatial regression models with panel data from 151 municipalities between 2009 and 2015, the analysis explores variation in spending behavior by policy type –developmental, redistributive, and allocational. The findings indicate that developmental and redistributive policy expenditures are positively influenced by neighboring governments’ spending, especially under conditions of intense electoral competition. In contrast, allocational policy spending shows no evidence of spatial interdependence. These results suggest that yardstick competition is selective and shaped by both political incentives and the nature of policy visibility. The study contributes to understanding local fiscal behavior and the role of interjurisdictional benchmarking in democratic accountability.

Suggested Citation

  • Na Young Kim & Kwang Bin Bae, 2026. "Political Yardstick Competition in Local Public Expenditure Decisions: Evidence from Korean Municipalities," Hacienda Pública Española / Review of Public Economics, IEF, vol. 257(2), pages 31-55, June.
    • Handle: RePEc:hpe:journl:y:2026:v:257:i:2:p:31-55
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    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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