Stimulating Local Public Employment: Do General Grants Work?

Abstract

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Who's Coming to the Rescue? Revenue-Sharing Slumps and Implicit Bailouts During the Great Recession

“…Various authors have already stressed the omitted-variable and endogeneity problems that plague the estimation of the effects of intergovernmental transfers (e.g., Knight, 2002) and, indeed, several studies employ quasi-experimental methods for precisely this purpose (see Gordon, 2004;Dahlberg et al, 2008;Lundqvist, Dahlberg, and Mörk, 2014;Litschig and Morrison, 2013). In some of these papers the identification strategy exploits the exogenous variation created by a reform in the transfer formula (see Gordon, 2004 andCascio, Gordon, andReber, 2013), others rely on a 'regression discontinuity design' that exploits jumps or kinks at specific population thresholds (e.g., Dahlberg et al, 2008;Lundqvist, Dahlberg, and Mörk, 2014;and Litschig and Morrison, 2013). Our identification strategy in this papers combines the advantages of these two approaches.…”

Schools and Stimulus

“…She finds that, although the additional federal grants initially caused a dollar-for-dollar increase in school spending, over time school districts offset those increases with reductions in their own contributions to education funding. Lundqvist, Dahlberg and Mörk (2014) study the impact of intergovernmental grants to local governments in Sweden and find that the grants do not stimulate local public employment. Evans and Owens (2007) study the extent to which federal grants to fund new police hires increased the size of local police forces versus simply supplanting local funding.…”

The causal effect of coalition governments on fiscal policies: evidence from a Regression Kink Design

“…Moreover, the study fits in with recent studies in political economy that use methods from the programme evaluation literature to measure the effects of political institutions on economic outcomes (Pettersson-Lidbom, 2008;Gagliarducci and Nannicini, 2013;Tyrefors Hinnerich and Pettersson-Lidbom, 2014). Furthermore, this study is related to a new body of literature that utilizes the RKD to generate credibly causal estimates (Dahlberg et al, 2008;Nielsen et al, 2010;Simonsen et al, 2010;Card et al, 2012;Lundqvist et al, 2014). This study is one of the very first to implement such a design.…”