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

Amihai Glazer and Stef Proost

No 80913, Working Papers from University of California-Irvine, Department of Economics

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.

Keywords: Federalism; Capital subsidies; Transit subsidies (search for similar items in EconPapers)
JEL-codes: H77 H71 L92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ppm
Date: 2008-12
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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:irv:wpaper:080913

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