Government Spending and Re-election

Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population cutoffs over the period 1982-1985. We find that extra fiscal transfers resulted in a 20% increase in local government spending per capita, and an increase of about 10 percentage points in the re-election probability of local incumbent parties. We also find positive effects of the government spending on education outcomes and earnings, which we interpret as indirect evidence of public service improvements. Together, our results provide evidence that electoral rewards encourage incumbents to spend part of additional revenues on public services valued by voters, a finding in line with agency models of electoral accountability.

Intergovernmental Transfers and Elementary Education: Quasi-Experimental Evidence from Brazil

Whether providing additional resources to local communities leads to improved public services and better outcomes more generally, given existing management capacity and incentive and accountability structures, is an unresolved yet important question for public policy. This paper uses a regression-discontinuity design to evaluate the effect of unrestricted fiscal transfers on local spending (including on education), schooling and learning in Brazil. Results show that transfers increase local public spending almost one for one with no evidence of crowding out own revenue or other revenue sources. Extra per capita transfers of 1000 Reais lead to about 0.42 additional years of elementary schooling and student literacy rates increase by about 5.6 percentage points on average. Part of this effect arises through higher teacher-student ratios in municipal elementary school systems. Results also suggest that additional resources have stronger effects in more rural and less developed parts of Brazil.

The effects of a universal child benefit

I study the impact of a universal child benefit on fertility and family well-being. I exploitthe unanticipated introduction of a new, sizeable, unconditional child benefit in Spain in2007, granted to all mothers giving birth on or after July 1, 2007. The regressiondiscontinuity-type design allows for a credible identification of the causal effects. I find thatthe benefit did lead to a significant increase in fertility, as intended, part of it coming froman immediate reduction in abortions. On the unintended side, I find that families whoreceived the benefit did not increase their overall expenditure or their consumption ofdirectly child-related goods and services. Instead, eligible mothers stayed out of the laborforce significantly longer after giving birth, which in turn led to their children spending lesstime in formal child care and more time with their mother during their first year of life. Ialso find that couples who received the benefit were less likely to break up the year afterhaving the child, although this effect was only short-term. Taken together, the resultssuggest that child benefits of this kind may successfully increase fertility, as well asaffecting family well-being through their impact on maternal time at home and familystability.

Government spending and re-election: Quasi-experimental evidence from Brazilian municipalities

Does additional government spending improve the electoral chances of incumbent politicalparties? This paper provides the first quasi-experimental evidence on this question. Our researchdesign exploits discontinuities in federal funding to local governments in Brazil around severalpopulation cutoffs over the period 1982-1985. We show that extra fiscal transfers resulted in a20% increase in local government spending per capita, and an increase of about 10 percentagepoints in the re-election probability of local incumbent parties. In the context of an agency modelof electoral accountability, as well as existing results indicating that the revenue jumps studiedhere had positive impacts on education outcomes and earnings, these results suggest that expectedelectoral rewards encouraged incumbents to spend additional funds in ways that were valued byvoters.

Financing local development: Quasi-experimental evidence from municipalities in Brazil, 1980-1991

This paper uses a regression discontinuity design to estimate the impact of additional unrestrictedgrant financing on local public spending, public service provision, schooling, literacy, andincome at the community (municipio) level in Brazil. Additional transfers increased local publicspending per capita by about 20% with no evidence of crowding out own revenue or otherrevenue sources. The additional local spending increased schooling per capita by about 7% andliteracy rates by about 4 percentage points. The implied marginal cost of schooling -accountingfor corruption and other leakages- amounts to about US$ 126, which turns out to be similar tothe average cost of schooling in Brazil in the early 1980s. In line with the effect on human capital,the poverty rate was reduced by about 4 percentage points, while income per capita gains werepositive but not statistically significant. Results also suggest that additional public spending hadstronger effects on schooling and literacy in less developed parts of Brazil, while poverty reductionwas evenly spread across the country.

The long-run and intergenerational education impacts of intergovernmental transfers

This paper provides regression discontinuity evidence on long-run and intergenerational education impacts of a temporary increase in federal transfers to local governments in Brazil. Revenues and expenditures of the communities benefiting from extra transfers temporarily increased by about 20% during the 4 year period from 1982 to the end of 1985. Schooling and literacy gains for directly exposed cohorts established in previous work that used the 1991 census are attenuated but persist in the 2000 and 2010 censuses. Children and adolescents of the next generation --born after the extra funding had disappeared-- show gains of about 0.08 standard deviation across the entire score distribution of two nationwide exams at the end of the 2000s. While we find no evidence of persistent improvements in school resources, we document discontinuities in education levels, literacy rates and incomes of test takers' parents that are consistent with intergenerational human capital spillovers.

Saving lives: Evidence from a conditional food supplementation program

Many governments in developing countries implement programs that aim to address nutrionalfailures in early childhood, yet evidence on the effectiveness of these interventions is scant. Thispaper evaluates the impact of a conditional food supplementation program on child mortality inEcuador. The Programa de Alimentaci?n y Nutrici?n Nacional (PANN) 2000 was implementedby regular staff at local public health posts and consisted of offering a free micronutrient-fortifiedfood, Mi Papilla, for children aged 6 to 24 months in exchange for routine health check-ups forthe children. Our regression discontinuity design exploits the fact that at its inception, the PANN2000 was running for about 8 months only in the poorest communities (parroquias) of certainprovinces. Our main result is that the presence of the program reduced child mortality in cohortswith 8 months of differential exposure from a level of about 2.5 percent by 1 to 1.5 percentagepoints.

Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain

[spa] En este trabajo examinamos si, en la asignación de transferencias, los gobernantes regionales discriminan a favor de los gobiernos locales controlados por el mismo partido político, y si las perspectivas electorales de los gobiernos locales mejoran si están políticamente alineados con el gobierno regional. Con una nueva base de datos que considera 3.000 municipios españoles durante el período 2000-07 y un diseño de discontinuidad en la regresión, documentamos un efecto robusto de importante magnitud: en elecciones ajustadas, los municipios alineados con el gobierno regional reciben, en media, un 83% más de transferencias per cápita y su gobernante obtiene un 10% más de votos en las elecciones locales. También demostramos que el efecto de la alineación política es mayor: (i) si las elecciones regionales y locales se celebran el mismo día, (ii) en regiones donde las elecciones regionales son menos competidas, y (iii) en regiones con más recursos presupuestarios.

Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain

[spa] En este trabajo examinamos si, en la asignación de transferencias, los gobernantes regionales discriminan a favor de los gobiernos locales controlados por el mismo partido político, y si las perspectivas electorales de los gobiernos locales mejoran si están políticamente alineados con el gobierno regional. Con una nueva base de datos que considera 3.000 municipios españoles durante el período 2000-07 y un diseño de discontinuidad en la regresión, documentamos un efecto robusto de importante magnitud: en elecciones ajustadas, los municipios alineados con el gobierno regional reciben, en media, un 83% más de transferencias per cápita y su gobernante obtiene un 10% más de votos en las elecciones locales. También demostramos que el efecto de la alineación política es mayor: (i) si las elecciones regionales y locales se celebran el mismo día, (ii) en regiones donde las elecciones regionales son menos competidas, y (iii) en regiones con más recursos presupuestarios.

Innovation sources and productivity in Catalonian firms: a quantile regression analysis

This paper explores the effects of two main sources of innovation -intramural and external R&D- on the productivity level in a sample of 3,267 Catalonian firms. The data set used is based on the official innovation survey of Catalonia which was a part of the Spanish sample of CIS4, covering the years 2002-2004. We compare empirical results by applying usual OLS and quantile regression techniques both in manufacturing and services industries. In quantile regression, results suggest different patterns at both innovation sources as we move across conditional quantiles. The elasticity of intramural R&D activities on productivity decreased when we move up the high productivity levels both in manufacturing and services sectors, while the effects of external R&D rise in high-technology industries but are more ambiguous in low-technology and knowledge-intensive services. JEL codes: O300, C100, O140. Keywords: Innovation sources, R&D, Productivity, Quantile regression

A priori ratemaking using bivariate poisson regression models

In automobile insurance, it is useful to achieve a priori ratemaking by resorting to gene- ralized linear models, and here the Poisson regression model constitutes the most widely accepted basis. However, insurance companies distinguish between claims with or without bodily injuries, or claims with full or partial liability of the insured driver. This paper exa- mines an a priori ratemaking procedure when including two di®erent types of claim. When assuming independence between claim types, the premium can be obtained by summing the premiums for each type of guarantee and is dependent on the rating factors chosen. If the independence assumption is relaxed, then it is unclear as to how the tari® system might be a®ected. In order to answer this question, bivariate Poisson regression models, suitable for paired count data exhibiting correlation, are introduced. It is shown that the usual independence assumption is unrealistic here. These models are applied to an automobile insurance claims database containing 80,994 contracts belonging to a Spanish insurance company. Finally, the consequences for pure and loaded premiums when the independence assumption is relaxed by using a bivariate Poisson regression model are analysed.

Innovation sources and productivity: a quantile regression analysis

This paper explores the effects of two main sources of innovation —intramural and external R&D— on the productivity level in a sample of 3,267 Catalan firms. The data set used is based on the official innovation survey of Catalonia which was a part of the Spanish sample of CIS4, covering the years 2002-2004. We compare empirical results by applying usual OLS and quantile regression techniques both in manufacturing and services industries. In quantile regression, results suggest different patterns at both innovation sources as we move across conditional quantiles. The elasticity of intramural R&D activities on productivity decreased when we move up the high productivity levels both in manufacturing and services sectors, while the effects of external R&D rise in high-technology industries but are more ambiguous in low-technology and services industries.

Factors explaining local privatization: A meta-regression analysis

Privatization of local public services has been implemented worldwide in the last decades. Why local governments privatize has been the subject of much discussion, and many empirical works have been devoted to analyzing the factors that explain local privatization. Such works have found a great diversity of motivations, and the variation among reported empirical results is large. To investigate this diversity we undertake a meta-regression analysis of the factors explaining the decision to privatize local services. Overall, our results indicate that significant relationships are very dependent upon the characteristics of the studies. Indeed, fiscal stress and political considerations have been found to contribute to local privatization specially in the studies of US cases published in the eighties that consider a broad range of services. Studies that focus on one service capture more accurately the influence of scale economies on privatization. Finally, governments of small towns are more affected by fiscal stress, political considerations and economic efficiency, while ideology seems to play a major role for large cities.

Estimation of lean meat content in pig carcasses using X-ray Computed Tomography and PLS regression

Lean meat percentage (LMP) is an important carcass quality parameter. The aim of this work is to obtain a calibration equation for the Computed Tomography (CT) scans with the Partial Least Square Regression (PLS) technique in order to predict the LMP of the carcass and the different cuts and to study and compare two different methodologies of the selection of the variables (Variable Importance for Projection — VIP- and Stepwise) to be included in the prediction equation. The error of prediction with cross-validation (RMSEPCV) of the LMP obtained with PLS and selection based on VIP value was 0.82% and for stepwise selection it was 0.83%. The prediction of the LMP scanning only the ham had a RMSEPCV of 0.97% and if the ham and the loin were scanned the RMSEPCV was 0.90%. Results indicate that for CT data both VIP and stepwise selection are good methods. Moreover the scanning of only the ham allowed us to obtain a good prediction of the LMP of the whole carcass.

Innovation sources and productivity in Catalonian firms: a quantile regression analysis

This paper explores the effects of two main sources of innovation - intramural and external R&D— on the productivity level in a sample of 3,267 Catalonian firms. The data set used is based on the official innovation survey of Catalonia which was a part of the Spanish sample of CIS4, covering the years 2002-2004. We compare empirical results by applying usual OLS and quantile regression techniques both in manufacturing and services industries. In quantile regression, results suggest different patterns at both innovation sources as we move across conditional quantiles. The elasticity of intramural R&D activities on productivity decreased when we move up the high productivity levels both in manufacturing and services sectors, while the effects of external R&D rise in high-technology industries but are more ambiguous in low-technology and knowledge-intensive services. JEL codes: O300, C100, O140 Keywords: Innovation sources, R&D, Productivity, Quantile Regression