Are Rules-based Government Programs Shielded from Special-Interest Politics? Evidence from Revenue-Sharing Transfers in Brazil

Stephan Litschig

No 483, Working Papers from Barcelona School of Economics

Abstract: Manipulation of government finances for the benefit of narrowly defined groups is usually thought to be limited to the part of the budget over which politicians exercise discretion in the short run, such as earmarks. Analyzing a revenue-sharing program between the central and local governments in Brazil that uses an allocation formula based on local population estimates, I document two main results: first, that the population estimates entering the formula were manipulated and second, that this manipulation was political in nature. Consistent with swing-voter targeting by the right-wing central government, I find that municipalities with roughly equal right-wing and non-right-wing vote shares benefited relative to opposition or conservative core support municipalities. These findings suggest that the exclusive focus on discretionary transfers in the extant empirical literature on special-interest politics may understate the true scope of tactical redistribution that is going on under programmatic disguise.

Keywords: Bureaucracy; institutions; redistributive politics; electoral competition (search for similar items in EconPapers)
JEL-codes: D72 D73 H77 (search for similar items in EconPapers)
Date: 2015-09
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Journal Article: Are rules-based government programs shielded from special-interest politics? Evidence from revenue-sharing transfers in Brazil (2012)
Working Paper: Are rules-based government programs shielded from special-interest politics? Evidence from revenue-sharing transfers in Brazil (2012)
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