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The purpose of this paper is to investigate the role played by the geographic distance between the poor and non‐poor in the local demand for income redistribution and, in…
The purpose of this paper is to investigate the role played by the geographic distance between the poor and non‐poor in the local demand for income redistribution and, in particular, to provide an empirical test of the geographically limited altruism model proposed by Pauly, incorporating the possibility of participation costs associated with the provision of transfers.
First, the authors motivate the discussion by allowing for an “iceberg cost” as participation for the poor individuals in Pauly's original model. Next, using data from the 2000 Brazilian Census and a panel based on the National Household Sample Survey (PNAD) from 2001 to 2007, the authors estimate the effect of the proximity between poor and non‐poor on the demand for redistribution.
All of the authors' distance‐related explanatory variables indicate that an increased proximity between poor and non‐poor is associated with better targeting of the programs (demand for redistribution). For instance, a one‐hour increase in the time spent commuting by the poor reduces the targeting by 3.158 percentage points. This result is similar to that of Ashworth et al., but is definitely not due to the program leakages. To empirically disentangle participation costs and spatially restricted altruism effects, an additional test is conducted using unique panel data based on the 2004 and 2006 PNAD, which assess the number of benefits and the average benefit value received by beneficiaries. The estimates suggest that both cost and altruism play important roles in the demand for redistribution and might reduce targeting in Brazil. Lastly, the results indicate that “size matters”; i.e. the budget for redistribution has a positive impact on targeting.
Our results suggest that a totally centralized supply of transfers may be more inefficient than local redistribution in terms of targeting, either due to higher participation costs or because of the eventual greater geographical distance between the national median voter and poor individuals. However, a partial role for the federal government, such as providing funds for redistribution, seems to improve targeting.
In particular, the paper provides an empirical test for the geographically limited altruism model proposed by Pauly, incorporating the possibility of participation costs associated with the provision of transfers. The authors motivate this discussion by adding the possibility of distance‐related “iceberg costs” of delivering benefits to poor individuals and show that these two effects of distance may act to lower the demand for transfers, making it difficult to distinguish between the two effects. These two effects of distance act by lowering the demand for transfers, making it difficult to disentangle the effect of altruism from the effect of cost. The authors' empirical strategy seems to allow to identify each of them and to provide a suggestion on whether it is advantageous to carry out redistribution at the local level.
Municipal financial decisions involve the interaction of political actors (including voters, elected officials, and bureaucrats) pursuing their own interests. Although…
Municipal financial decisions involve the interaction of political actors (including voters, elected officials, and bureaucrats) pursuing their own interests. Although voters should determine public choices through elected officials, bureaucrats have the incentives and may have the monopoly power to dominate the process. This study investigates the relationships among municipal spending, fiscal manipulation, and financial monitoring. Fiscal illusion (as measured by revenue complexity) is employed as an empirical surrogate for bureaucratic manipulation and it is hypothesized that financial audits are an effective monitoring technique for moderating possible bureaucratic manipulation. The results of the study suggest that expenditure levels are related to political power and that fiscal illusion is significant for explaining expenditure levels, especially for cities having qualified opinions. Weak support is provided for the hypothesis that the financial audit is a monitoring technique that may constrain bureaucratic overspending. These findings have important implications for both public administration and governmental accounting and suggest the need for further research on monitorig effectiveness.
The relative size of the State in industrialized economies has increased dramatically during the past century giving rise to legitimate fears that such a trend might end…
The relative size of the State in industrialized economies has increased dramatically during the past century giving rise to legitimate fears that such a trend might end up having an adverse impact on growth. This chapter explores the relationship between the development of government activities and economic growth. It starts by evoking problems related to the measurement of the public sector before reviewing statistical evidence on the long-term growth of the share of the State in the economy. It then provides a number of explanations for this phenomenon including those pertaining to the functioning of the political system itself thereby pointing toward inefficiencies. The next step is to explore the principal avenues along which government interventions can positively or negatively interfere with the growth potential of the economy. It turns out that while public expenditures – especially those responding to market failures – tend to be favorable to growth, most taxes are growth-hindering. The final part of the chapter singles out some pitfalls in the empirical investigation of this relationship. The conjecture is that the nonlinear and possibly endogenous nature of the hypothesized nexus can explain the lack of consensus in empirical studies conducted so far.
The impact of form of government on municipal expenditures has been debated by several scholars and researchers over the past thirty years. Part of the support for…
The impact of form of government on municipal expenditures has been debated by several scholars and researchers over the past thirty years. Part of the support for preference of the council-manager form of government over the other government forms relies on claims that the council-manager form provides increased efficiency in the operation of government. Results of numerous municipal expenditure studies, however, reveal that this outcome is not always clearly demonstrated. Almost all of this existing literature has utilized data from municipalities with populations greater than 25,000. This study evaluates the relationship between form of government and per capita expenditures in cities and towns with populations between 2,500 and 25,000. Survey data from 559 cities and towns are analyzed to determine whether or not their form of government can be significantly related to municipal per capita expenditures. Results of this analysis reveal that council-manager cities and towns exhibit significantly higher per capita expenditure levels than cities and towns with the non-council-manager forms of government.
There is an on-going debate as to whether health is negatively affected by economic inequality. Still, we have limited knowledge of the mechanisms relating inequality to…
There is an on-going debate as to whether health is negatively affected by economic inequality. Still, we have limited knowledge of the mechanisms relating inequality to individual health and very little evidence comes from less-developed economies. We use individual and multi-level data from Zambia on child nutritional health to test three hypotheses consistent with a negative correlation between income inequality and population health: the absolute income hypothesis (AIH), the relative income hypothesis (RIH) and the income inequality hypothesis (IIH). The results confirm that absolute income positively affects health. For the RIH we find sensitivity to the reference group used. Most interestingly, we find higher income inequality to robustly associate with better child health. The same pattern appears in a cross country regression. To explain the conflicting results in the literature we suggest examining potential mediators such as generosity, food sharing, trust and purchasing power.
This paper can be integrated in the set of studies that following the first work by Borcheding and Deacon have tested different specifications of Median Voter Models. The…
This paper can be integrated in the set of studies that following the first work by Borcheding and Deacon have tested different specifications of Median Voter Models. The main innovation in this paper results from the use of a proxy variable for income distribution, in order to test in what degree the amount demanded of public goods reflects the existence of different income concentrations. An adjustment in the tax share for spatial tax incidence is also used. Finally, the fit of the model for counties above and under median population is analyzed allowing us to make some inference about the relationship between the adequacy of the analysis and “distance” between voters and representatives.
There were 398 bond referenda by Texas school districts from 1990-95. On average, these received a 58% voter approval rating and almost 75% of the referenda passed. A…
There were 398 bond referenda by Texas school districts from 1990-95. On average, these received a 58% voter approval rating and almost 75% of the referenda passed. A public choice model suggests many factors related to the voter percentage, including the amount of the bond issue per voter, percent of non-white population, and the amount of state and federal aid in the districts. Districts with Big Six auditors received higher voter percentages ceteris paribus, suggesting increased voter confidence in districts reviewed by brand name auditors. Districts with higher standardized test scores (TAAS) had more favorable votes, which can be interpreted that voters are willing to fund more infrastructure when output performance levels are adequate. A public choice model focusing on capital outlays was successful in explaining spending levels. A Big Six audit was associated with higher capital outlays, although TAAS was insignificant.
A public finance framework is used to examine the relationship between community composition, namely occupancy status, and the provision of governmental services. A…
A public finance framework is used to examine the relationship between community composition, namely occupancy status, and the provision of governmental services. A comprehensive literature survey suggests that a systematic relationship exists between the fraction of renters in a given jurisdiction and the level of fiscal expenditures. More particularly, it would appear that renters ceteris paribus are willing to support a higher level of publicly provided goods than homeowners. The competing hypotheses of renter illusion and renter rationality are discussed, as are the differing implications for public policy. Suggestions are also made on how future research on this important topic might proceed.
Revenue sharing is ubiquitous among North American professional sports leagues. Under pool revenue sharing, above-average revenue teams of a league effectively transfer…
Revenue sharing is ubiquitous among North American professional sports leagues. Under pool revenue sharing, above-average revenue teams of a league effectively transfer revenues to below-average revenue teams. Herein, the authors find and prove that a league will vote into policy a pool revenue sharing arrangement if and only if mean team revenue is greater than presharing median revenue, where this condition is equivalent to the presence of positive nonparametric skewness in a league’s distribution of team revenues. This represents a median voter theorem for league revenue sharing.
The authors consider the case of revenue sharing for the National Football League (NFL), a league that pools and equally shares national revenues among member teams.
The authors find evidence of positive and significant nonparametric skewness in NFL team revenue distributions for the 2004–2016 seasons. This distribution is observed amid annual majority rule votes of League owners in favor of maintaining the incumbent pool revenue sharing model (as opposed to no team revenue sharing). Distribution of revenues – namely the existence of outlying large market NFL teams – appears to consistently explain the historical popularity of NFL revenue sharing.
The median voter theorem uncovered in the case of NFL applies to all professional sports leagues and can be used predictively as well as descriptively.