Fiscal transfers, local government, and entrepreneurship

Steven Ongena and Piotr Danisewicz

No 15384, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Can local government spending spur entrepreneurial activity? To answer this question we study Poland where municipalities with lower tax revenues receive direct monetary grants from the national budget that vary at multiple pre-determined and non-manipulable thresholds. Employ-ing a fuzzy regression discontinuity design, we find a positive impact of fiscal transfers on the number of firms, especially sole proprietorships and small firms. The impact is stronger in mu-nicipalities where the opposition is more involved in the legislative process or more parties are represented in the municipal council, and in regions where historical legacies shaped a more positive attitude towards entrepreneurship.

Keywords: Fiscal transfers; Local government spending; entrepreneurship; “fuzzy†regression disconti-nuity design (search for similar items in EconPapers)
JEL-codes: E62 H71 H72 L26 P16 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-ent, nep-mac, nep-pbe, nep-sbm, nep-tra and nep-ure
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Citations: View citations in EconPapers (1)

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Journal Article: Fiscal transfers, local government, and entrepreneurship (2024)
Working Paper: Fiscal transfers, local government, and entrepreneurship (2020)
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