Capital-intensive projects induce more effort than labor-intensive projects

Amihai Glazer and Stef Proost

Center for Economic Studies - Discussion papers from Katholieke Universiteit Leuven, Centrum voor Economische Studiën

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.

Date: 2008-12

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http://www.econ.kuleuven.be/eng/ew/discussionpapers/Dps08/Dps0831.pdf

Related works:
Working Paper: Capital-Intensive Projects Induce More Effort Than Labor-Intensive Projects (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:ete:ceswps:ces0831

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