‘Hold that ghost’: using notches to identify manipulation of population-based grants

Dirk Foremny, Jordi Jofre-Monseny () and Albert Solé-Ollé
Additional contact information
Jordi Jofre-Monseny: University of Barcelona & IEB

No 2015/39, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: We study local government incentives to misreport the information required to implement a formula grant. We focus specifically on population, in theory the easiest variable for the grantor to verify. We analyze the Spanish case and show how a switch from the use of census to registered population data (the latter administered by the municipalities) led to a manipulation of the population numbers used by central government to allocate grants to municipalities. As a result, registers included a proportion of ‘ghost’ citizens, that is, people who presented no trace of actually residing in the municipality. We identify the effects of grants on population over-reporting taking profit of notches in the grant scheme (i.e., one based on weighted population with the weights increasing at specific population thresholds). We document an excess mass of municipalities to the right of the notch threshold and a density hole to the left of it. There are several indications that manipulation (rather than real population responses) is the mechanism at work.

Keywords: Intergovernmental transfers; notches; bunching; enforcement (search for similar items in EconPapers)
JEL-codes: D7 H26 H7 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2015
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://ieb.ub.edu/wp-content/uploads/2018/04/2015-IEB-WorkingPaper-39.pdf (application/pdf)

Related works:
Working Paper: 'Hold that Ghost': Using Notches to Identify Manipulation of Population-Based Grants (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2015-39

Access Statistics for this paper

More papers in Working Papers from Institut d'Economia de Barcelona (IEB) Contact information at EDIRC.
Bibliographic data for series maintained by ().