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Resource Transfers to Local Governments: Political Manipulation and Household Responses in West Bengal

Author

Listed:
  • Pranab Bardhan

    (University of California, Berkeley)

  • Sandip Mitra

    (Indian Statistical Institute)

  • Dilip Mookherjee

    () (Boston University)

  • Anusha Nath

    (Federal Reserve Bank of Minneapolis)

Abstract

We study how political support of household heads respond to receipt of different private and public good benefits delivered by local governments, and whether upper level governments respond strategically by manipulating program budgets to lower level government in West Bengal, India. We exploit redistricting of electoral boundaries by a non-partisan Election Commission, a plausibly exogenous shock to political competition. Consistent with a model of politically motivated allocation, private recurring benefit programs contracted (resp. expanded) in villages redistricted to more competitive constituencies when bottom and upper tier governments were controlled by opposing (resp. same) parties. The resulting changes in household benefit flows help predict household political support, which in turn rationalize the inter-village targeting patterns. The results illustrate the tendency for political parties to manipulate transfers across constituencies in the absence of formula-based grants to local governments, and more generally for political incentives to focus on delivery of short-term private benefits rather than one-time benefits or public goods consistent with theories of political clientelism.

Suggested Citation

  • Pranab Bardhan & Sandip Mitra & Dilip Mookherjee & Anusha Nath, 2018. "Resource Transfers to Local Governments: Political Manipulation and Household Responses in West Bengal," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-319, Boston University - Department of Economics.
  • Handle: RePEc:bos:iedwpr:dp-319
    as

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    File URL: http://people.bu.edu/dilipm/wkpap/wbbudgetmanipredistrDec2018v6comp.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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