Spatial Decentralization and Program Evaluation: Theory and an Example from Indonesia

Mark Pitt () and Nidhiya Menon

No 5208, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper proposes a novel instrumental variable method for program evaluation that only requires a single cross-section of data on the spatial intensity of programs and outcomes. The instruments are derived from a simple theoretical model of government decision-making in which governments are responsive to the attributes of places and their populations, rather than to the attributes of individuals, in making allocation decisions across space, and have a social welfare function that is spatially weakly separable, that is, that the budgeting process is multi-stage with respect to administrative districts and sub-districts. The spatial instrumental variables model is then estimated and tested by GMM with a single cross-section of Indonesian census data. The results offer support to the identification strategy proposed.

Keywords: instrumental variables; program evaluation; spatial decentralization; Indonesia (search for similar items in EconPapers)
JEL-codes: C21 C50 H44 O12 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-09
New Economics Papers: this item is included in nep-sea and nep-ure
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Published - published as 'Spatial Decentralization and Programme Evaluation: Theory and an Example' in: Oxford Bulletin of Economics and Statistics, 2019, 81 (3), 511 - 539

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Working Paper: Spatial Decentralization and Program Evaluation: Theory and an Example from Indonesia (2010)
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