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Why Not Fully Spend a Conditional Block Grant?

Riemer Faber () and Pierre Koning ()
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Riemer Faber: CPB Netherlands Bureau for Economic Policy Analysis

No 6712, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper studies a conditional block grant that Dutch municipalities receive for welfare-to-work programs. Many municipalities do not fully use this grant, although programs are beneficial for them. We argue that municipalities incur expenses to use the grant. If these costs are substantial, then it is optimal not to fully use the grant. Based on municipality-specific data on grants and actual expenditures, we estimate that municipalities have to add about 90 cents from their own resources to spend 1 euro of the grant. As a result, the conditional block grant is de facto a closed-ended matching grant.

Keywords: intergovernmental grants; conditional block grants; welfare-to-work programs (search for similar items in EconPapers)
JEL-codes: H77 H20 H71 I38 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2012-07
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Related works:
Journal Article: Why not fully spend a conditional block grant? (2017) Downloads
Working Paper: Why Not Fully Spend a Conditional Block Grant? (2012) Downloads
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