Partisanship and local fiscal policy: Evidence from Brazilian cities

Abstract

We study the role of partisanship in shaping local fiscal policy in Brazilian cities in the 2004-2016 period. Using a regression-discontinuity design, we find no effect of left-wing mayors on the size of the city government nor on the allocation of spending across main budget categories (current spending, investment and personnel). We do find a modest, significant and robust positive effect of approximately 0.6 percentage points on the social expenditures share. We investigate mechanisms and find that re-election concerns and institutional constraints can explain the limited extent of spending allocation effects, while Tiebout-competition does not seem to play a role.

Do party politics still matter? Examining the effect of parties, governments and government changes on the local tax rate in Sweden

“…The first refers to the constitutional constraint of local tax policy, which highly restricts local politicians' room to manoeuvre. In addition to the US context, other scholars have found similar limitations for local governments to pursue taxation policy elsewhere (Gouvêa and Girardi, 2021). Furthermore, the relevance of the ideological logic vanishes in some subnational contexts.…”

“…We expected that municipalities with larger populations would have lower municipal taxes and lower tax increases due to the better preconditions that this implies (e.g. Gouvêa and Girardi, 2021). Accordingly, we expected that the coefficient for population size would be negative.…”

Party Systems, Political Competition, and Inequality in Subnational Brazil

“…Others associate stronger unionization and left party strength with lower levels of economic inequality across subnational units in countries such as Canada and the United States (e.g., Kellerman 2007;Kelly and Witko 2012). Some show political parties of the left to be associated with higher levels of social spending at the subnational level (Hecock 2006;González 2017;Gouvêa and Girardi 2019). In federal states where governors exhibit power to shape electoral politics, policy, and state budgets-as in Brazil (Abrucio 1998;Samuels and Abrucio 2000)-the partisanship of the governor may also affect the policy-making process and redistribution (Samuels 2003;González and Mamone 2015).…”

Legislature Size and Welfare: Evidence from Brazil

“…For instance, de Benedictis-Kessner and Warshaw (2016) and Gerber and Hopkins (2011) find differences in governance when comparing Democratic and Republican mayors. Specifically about Brazil, Gouvea and Girardi (2021) show that social spending increases with left-wing mayors. Using discontinuities created by a constitutional amendment that reverted the thresholds we study here, Frey (2021) shows that changes in council size lower the support for mayor-backed candidates.…”