Transfers, political free-riding and elections: An application to Argentine local elections

Toledo

Congreso; I Jornadas Iberoamericanas de Financiación Local; 2011

Universidad de Santiago de Compostela (USC)

In this paper, we examine the impact of descentralized public policy on local elections outcomes {both the probability of reelection and the intensity of local electoral competition. We build a new dataset including local elections in the province of Cordoba for the years 2003, 2007 and 2011 and several types of scal transfers from the provincial government to the local governments. We nd that the odds of reelecting local incumbents are increasing in the incumbency dummies for both major parties, in the level of automatic transfers {taken in this paper as a proxy for economic conditions-, and increasing in the level of discre- tionary extraordinary transfers. Interestingly, there are two caveats that apply to the result on discretionary transfers. Firstly, discretionary transfers seem to influence the probability of reelection in districts were these transfers are more important as a source of nancing spending {townships and local villages{but not in municipalities and larger cities. Secondly, when exploring some heterogeneity in our results, we nd that the level of extraordinary discretionary transfers improve the probability of reelection only of those incumbencies aligned with the provincial government. Our results are robust to controlling for other potential explanatory variables.