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Capital-Intensive Projects Induce More Effort Than Labor-Intensive Projects

Author

Listed:
  • Amihai Glazer

    (Department of Economics, University of California-Irvine)

  • Stef Proost

    (Center for Economics Studies, Katholieke Universiteit Leuven)

Abstract

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials--a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.

Suggested Citation

  • Amihai Glazer & Stef Proost, 2008. "Capital-Intensive Projects Induce More Effort Than Labor-Intensive Projects," Working Papers 080913, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:080913
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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