Electoral Incentives and the Allocation of Public Funds

Frederico S. Finan () and Maurizio Mazzocco
Additional contact information
Frederico S. Finan: University of California, Berkeley

No 9623, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: It is widely believed that politicians allocate public resources in ways to maximize political gains. But what is less clear is whether this comes at a cost to welfare; and if so, whether alternative electoral rules can help reduce these costs. In this paper, we address both of these questions by modeling and estimating politicians' decisions to allocate public funds. We use data from Brazil's federal legislature, which grants each federal legislator a budget to fund public projects in his state. We find that 26 percent of the public funds are distorted relative to a social planner's allocation. We then use the model to simulate several potential policies reforms to the electoral system, including adopting approval voting and implementing term limits. We find that an approval voting system reduces the distortions by 7.5 percent. Term limits also reduce distortions, but come at the cost of more corruption, which makes it a welfare-reducing policy.

Keywords: corruption; public goods; distributive politics; electoral rules; term limits (search for similar items in EconPapers)
JEL-codes: H40 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2016-01
New Economics Papers: this item is included in nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published - published in: Journal of the European Economic Association, 2021, 19 (5), 2467–2512

Downloads: (external link)
https://docs.iza.org/dp9623.pdf (application/pdf)

Related works:
Journal Article: Electoral Incentives and the Allocation of Public Funds (2021)
Working Paper: Electoral Incentives and the Allocation of Public Funds (2016)
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:iza:izadps:dp9623

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().