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Regional Favoritism

Roland Hodler and Paul Raschky

The Quarterly Journal of Economics, 2014, vol. 129, issue 2, 995-1033

Abstract: We complement the literature on distributive politics by taking a systematic look at regional favoritism in a large and diverse sample of countries and by employing a broad measure that captures the aggregate distributive effect of many different policies. In particular, we use satellite data on nighttime light intensity and information about the birthplaces of the countries’ political leaders. In our panel of 38,427 subnational regions from 126 countries with yearly observations from 1992 to 2009, we find that subnational regions have more intense nighttime light when being the birth region of the current political leader. We argue that this finding provides evidence for regional favoritism. We explore the dynamics and the geographical extent of regional favoritism and show that regional favoritism is most prevalent in countries with weak political institutions and poorly educated citizens. Furthermore, foreign aid inflows and oil rents tend to fuel regional favoritism in weakly institutionalized countries, but not elsewhere. JEL Codes: D72, R11.

Date: 2014
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The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

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Handle: RePEc:oup:qjecon:v:129:y:2014:i:2:p:995-1033