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Grants-in-aid and the prospect of re-election: The impact of EU funds on mayoral elections in Poland

Monika Banaszewska () and Ivo Bischoff ()

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: We investigate whether grants-in-aid help the recipient government to get re-elected. We take Poland as our testing ground and analyze the impact of EU funds spent within a municipality on mayoral elections in 2010 and 2014. We employ an instrumental variables approach to account for the endogeneity of EU funds. Our results show that EU funds do not generally increase the mayors’ chance of reelection. We test whether the impact of EU funds is moderated by municipal characteristics. We find no moderating effect for the fiscal situation of municipalities but positive effects for human capital endowment and for the share of pro-European citizens. These results suggest that the political incentives inherent do not help to concentrate EU funds in regions where there is a particular need to foster economic development, nor do they help to direct funds to municipalities where the potential to reconcile EU sceptics is high.

Keywords: grants-in-aid; EU; Poland; local elections; instrumental variable regressions (search for similar items in EconPapers)
JEL-codes: D72 H77 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-eur, nep-knm, nep-pol and nep-tra
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201822

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