The influence of independent local parties on spending: Evidence from Dutch municipalities

Marianna Sebo (), Raymond Gradus () and Tjerk Budding ()
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Marianna Sebo: Department of Econometrics, Statistics and Applied Economics. John Keynes 1-11. 08034 Barcelona, Spain.
Tjerk Budding: School of Economics and Business and Tinbergen Institute, Vrije Universiteit Amsterdam.

No 202304, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: Do independent local parties make different decisions on municipal finances compared to their national counterparts? In this paper, we empirically analyze whether independent local parties affect public finances in Dutch municipalities. Using a matching strategy, we compare municipalities that are similar in their observable characteristics except for the presence of an independent local party majority in the municipal council. We provide evidence that shows that municipalities with independent local majorities indeed differ in terms of local spending, specifically they spend more on categories of Local Public Administration, Public Health and Environment and Culture and Recreation which are arguably more local-oriented. We extend our analysis by looking at the local effects of local independent majorities. Using a regression kink design, we find consistent results if we look at the changes that take place once the majority share of the seats in the municipal council has been reached by independent local parties.

Keywords: Local government; Spending categories; Local parties; Empirical research; Matching methods; Regression kink design. JEL classification: D72; H41; H72; H83. (search for similar items in EconPapers)
Pages: 47 pages
Date: 2023-05, Revised 2023-05
New Economics Papers: this item is included in nep-eur and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:202304

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