Does Gender Explain the Indebtedness Levels of Local Governments?

Does the balance matter? The gender within government and municipal indebtedness

“…Indeed, the results showed that an influence of the mayor's gender on the level of municipal debt emerges in the model that incorporates all possible effects (2), both direct and moderating, and using both diversity indexes. In the estimates that include the Blau index, the level of debt is 27.02 euros per capita lower (p. <0.01) in the municipalities led by female mayors, in line with the research carried out in Spain by Balaguer-Coll and Toneva (2019), and the recent study by Cuadrado-Ballesteros et al (2024) on municipalities with more than 50,000 inhabitants, and contrary to the findings of Cabaleiro-Casal and Buch-G omez (2021) in the same country and Suzuki and Avellaneda (2018) in Japan, who did not find any evidence of a significant relationship between having a female mayor and the level of municipal debt. This clear effect of the female mayor's gender in reducing municipal debt seems to verify the arguments for lower debt preferences by the female gender (Dohmen et al, 2011;Huang and Kisgen, 2013;Krogstrup and W€ alti, 2011).…”

“…Moreover, the fact that we have found weaker significant effects of gender diversity on municipal indebtedness in the first model than in the second model may be explained because the intergroup bias engendered by other factors seem to prevent visualizing the effects of diversity (van Knippenberg and Schippers, 2007). In contrast, the estimates with the indicator of the percentage of women in the government teamthe bias approachdo not allow us to visualize any effect on municipal debt in either of the two models, which is in line with recent research by Balaguer-Coll and Toneva (2019), Cabaleiro-Casal and Buch-G omez (2021) and Cuadrado-Ballesteros et al (2024), and furthermore seems to show evidence of the underlying differences between the concepts of diversity and gender bias. Therefore, these findings seem to endorse our arguments that the marked gender differences in budget preferences (Alesina and La Ferrara, 2005;Alvarez and McCaffery, 2003;Geys and Revelli, 2011;Slegten et al, 2019) mean that the greater the diversity of gender within municipal government teams, the higher the institutional financial sustainability, due to lower levels of debt.…”

“…Studies on public institutions, using the number or percentage of women, as well as many times the incorrect label of “gender diversity” to refer to the participation level of women – which represents a bias rather than a diversity approach – have tried to show whether this greater presence of women may influence tax and spending policies, deficits, and levels of institutional indebtedness (Balaguer-Coll and Toneva, 2019; Cabaleiro-Casal and Buch-Gómez, 2020, 2021; Chattopadhyay and Duflo, 2004; Cuadrado-Ballesteros et al ., 2024; Park, 2014; Slegten et al ., 2019; Suzuki and Avellaneda, 2018). Supported by diverse arguments and theories that we will present later (Dohmen et al ., 2011; Krogstrup and Wälti, 2011), specific research has explored the effects of this greater presence of women in decision-making bodies on municipal indebtedness without conclusive results (Balaguer-Coll and Toneva, 2019; Cabaleiro-Casal and Buch-Gómez, 2021; Cuadrado-Ballesteros et al ., 2024; Suzuki and Avellaneda, 2018), which Cabaleiro and Buch (2023) justify in that the effects of gender on some derived variables could not be directly observed.…”

“…From a group perspective and with support in the previous arguments, a few studies explored whether the number or percentage of women in decision-making teams had an effect of on municipal indebtedness, which is a gender bias approach, and have not shown conclusive results (Balaguer-Coll and Toneva, 2019; Cabaleiro-Casal and Buch-Gómez, 2021; Cuadrado-Ballesteros et al ., 2024; Suzuki and Avellaneda, 2018). Although Suzuki and Avellaneda (2018) found empirical support for their hypothesis that the increase in female councillors reduces the issuance of municipal bonds in Japan, recent research by Balaguer-Coll and Toneva (2019) and Cabaleiro-Casal and Buch-Gómez (2021) does not find a relationship between the proportion of female councillors and compliance with indebtedness legal limits, nor with municipal debt levels in Spain, while Cuadrado-Ballesteros et al . (2024) indicated that this effect appeared only if the number of female councillors was relatively high.…”

“…Although political theory has generally claimed that leftist governments have a laxer fiscal discipline than right-wing ones, leading to greater indebtedness in public institutions (Benito et al ., 2015), diverse research in Spain has shown no conclusive effects of ideology on municipal indebtedness (Balaguer-Coll et al ., 2016; Benito and Bastida, 2004; Cabaleiro-Casal and Buch-Gómez, 2021; Cuadrado-Ballesteros et al ., 2024).…”