Distributional Effects of Intergovernmental Transfers in Mexico

Carlos Rodriguez Castelan, Kiyomi E. Cadena and Laura Liliana Moreno Herrera
Authors registered in the RePEc Author Service: Carlos Rodríguez-Castelán

No 9209, Policy Research Working Paper Series from The World Bank

Abstract: A rigorous understanding of the developmental effect of fiscal transfers to subnational governments remains an important policy research issue globally. This paper exploits a novel dataset of 20 years of municipal poverty maps and local public finances to study the effects on local welfare of a large fiscal transfer fund earmarked for social investment in more than 2,000 Mexican municipalities. Results show a positive but modest effect on the average household income, and positive effects on seven nonmonetary welfare measures. In contrast, these funds have no significant impact on extreme and moderate monetary poverty. These results provide important lessons for policy on the effects of earmarked funds to reduce territorial poverty and inequality in terms of incentives to design formulas to distribute earmarked fiscal resources to subnational governments.

Keywords: Inequality; Health Care Services Industry; Public Sector Economics; Macro-Fiscal Policy; Public Finance Decentralization and Poverty Reduction; Economic Adjustment and Lending; Hydrology; Energy Policies&Economics (search for similar items in EconPapers)
Date: 2020-04-09
New Economics Papers: this item is included in nep-dev and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Distributional Effects of Intergovernmental Transfers in Mexico (2020)
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