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Intergovernmental grants and bureaucratic power


  • Dahlberg, Matz

    () (IFAU - Institute for Labour Market Policy Evaluation)

  • Lundqvist, Heléne

    () (Uppsala University, Department of Economics)

  • Mörk, Eva

    () (Institute for Labour Market Policy Evaluation)


In their role as agenda setters and implementers of political decisions, bureaucrats potentially have the power to influence decisions in their own favor. It is however difficult to empirically test whether bureaucrats actually are involved in such actions. In this paper we suggest and apply a new way of testing the hypothesis that bureaucrats can and do in fact affect policy to their own benefit. Making use of a discontinuity in the Swedish grant system, we estimate causal effects of intergovernmental grants on different types of personnel employed by the local governments. On the margin, we find a large, positive effect of grants on the number of bureaucrats in the central administration, but no effects on the number of personnel in other important sectors run by the local government (child care, schools and elderly care). These results support the view that bureaucrats are able to, and do indeed, affect the allocation of grants within municipalities to support own goals.

Suggested Citation

  • Dahlberg, Matz & Lundqvist, Heléne & Mörk, Eva, 2008. "Intergovernmental grants and bureaucratic power," Working Paper Series 2008:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  • Handle: RePEc:hhs:ifauwp:2008_017

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    More about this item


    Fiscal federalism; grants; bureaucrats; rent seeking; discontinuity analysis;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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