Do political parties matter? Evidence from German municipalities

Riedel Nadine (), Simmler Martin () and Wittrock Christian ()
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Riedel Nadine: University of Münster, Münster, Germany
Simmler Martin: University of Oxford Centre for Business Taxation, Park End StreetOX1 1HP, Oxford, United Kingdom
Wittrock Christian: RGS Econ, TU Dortmund, Dortmund, Germany

German Economic Review, 2021, vol. 22, issue 2, 153-198

Abstract: We assess whether the partisanship of local councils affects the level and composition of local public spending by German municipalities. Our identification strategy exploits changes in the party with the absolute majority in the local council, combining an instrumental variable strategy with a matching approach to address potential selection into treatment. We find evidence for strong partisan effects: Communities with a left-wing council majority spend more on ‘people-oriented’ public goods and less on infrastructure than communities with a right-wing dominated council.

Keywords: partisan effects; local governments; public spending (search for similar items in EconPapers)
JEL-codes: H4 H7 R5 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/ger-055-19

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