8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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1
Partisan alignment clientelism and intergovernmental transfers evidence from Spanish municipalities
lowastlowastlowastlowast
Marta Curto-Grau Albert Soleacute-Olleacute and Pilar Sorribas-Navarro
Universitat de Barcelona amp Institut drsquoEconomia de Barcelona
This draft May 2011
Abstract
In this study we provide additional and robust evidence of the impact of partisan alignment on
intergovernmental transfers to municipalities In addition we study several mechanisms throughwhich this impact could be affected by clientelism The empirical strategy consists on applying aregression discontinuity design on capital grants to Spanish municipalities over the period 2002-2007 The results show that municipalities politically aligned with upper tiers do benefit fromlarger transfers especially in the case of regional grants When clientelist tactics are introduced inour framework the allocation of grants is no longer based only on partisan politics but also ontwo other factors the political credit that ldquopolitical machinesrdquo can claim and their ability tomonitor who their constituents vote for In this sense we find that in smaller municipalities ndashwhere monitoring costs are lower- the discontinuity on transfers due to partisan ties is larger
Keywords intergovernmental transfers partisan alignment clientelism regression discontinuity
JEL classification H77 D72
lowast This paper has benefited from the financial support of ECO2009-12680ECON (Spanish Ministryof Education and Science) and project 2009 SGR 102 (Generalitat de Catalunya) We are alsograteful to Jonathan Rodden for his helpful commentsE-mail addresses mcurtoubedu (M Curto-Grau) asoleubedu (A Soleacute-Olleacute)
psorribasubedu (P Sorribas-Navarro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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2
1 Introduction
A good process of fiscal decentralization has to ensure that constituent units within a
federal system are provided with enough resources to meet their expenditure responsibilities
In most federations local governments have a weak tax base so in order to provide publicgoods and services to their citizens they rely significantly on transfers from upper-level
governments According to the normative criterion of fiscal federalism the allocation of
grants has to guarantee economic efficiency and equity amongst the members of the
federation (Musgrave 1959 1983 Oates 1972) Nonetheless the positive approach claims
that transfers are distributed by non-benevolent agents who are not driven by economic but
political interests (Grossman 1994) In line with this last view our paper evaluates to which
extent the distribution of grants is largely conditional on the partisan alignment betweendonor and recipient
The political economy literature has identified four main political determinants of the
regional allocation of national resources The first one is legislative representation
(Ansolabehere Gerber and Snyder 2003 Porto and Sanguinetti 2003) A second factor is
the share of ldquoswing votersrdquo versus ldquocore votersrdquo in constituencies This idea has been
analyzed in different ways through theoretical papers based on electoral competition
(Lindbeck and Weibull 1987 Dixit and Londregan 1998 Cox and McCubbis 1986)
through theoretical papers based on legislative bargaining (Weingast Shepsle and Johnsen
1981) through empirical studies (Schady 2000 Case 2001 Stroumlmberg 2001 Johansson
2003) which have provided mixed and inconclusive evidence until now Another determinant
is the citizensrsquo level of information and participation in the electoral system (Besley and
Burgess 2002 Stroumlmberg 2004) And last but not least it is also relevant the party affiliation
of the different government tiers (Grossman 1994 Levitt and Snyder 1995 Worthington and
Dollery 1998 Khemani 2003 Arulampalam et al 2009) Two main problems arise fromthis literature The first one is that measuring the concept of core and swing voters has proven
to be a difficult task The second issue is that whenever election results are used as variables
to explain the regional distribution of transfers one should correct for endogeneity problems
Our study presents an empirical analysis that aims at overcoming the two
aforementioned problems Firstly instead of taking a ldquoswing vs core voterrdquo approach the
explanatory variable for intergovernmental transfers is the political alignment between
municipalities and their upper-tiers There are two main reasons to believe that the
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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3
distribution of transfers may be biased towards co-partisans On the one hand following the
intuition beneath Diaz-Cayeros Magaloni and Weingast (2006) in certain circumstances the
incumbent party may have strong incentives to use a mechanism of punishments and rewards
to maintain electoral support Hence municipalities who defect to the opposition (ie
unaligned municipalities) should receive lower transfers as means of punishment This idea is
at odds with the swing voter models of Dixit and Londregan and Lindbeck and Weibull On
the other hand the distribution of grants on partisan grounds is also influenced by the fact that
voters have incomplete information about which tier of government is the source of the grant
In this situation the grantor may not be able to claim much (or even none) political credit for
the grant If there is no credit leakage (ie the grantor cannot claim his credit) he finds it more
profitable to distribute grants to aligned municipalities However if the leakage is large
enough the incumbent grantor may consider sending funds to unaligned municipalities as he
could still get some electoral reward from that The empirical evidence extracted from some
of the above mentioned studies concludes that the allocation of intergovernmental grants is
indeed skewed in favor of aligned municipalities For instance Khemani (2003) finds that
transfers subject to less stringent rules (more discretionary) are positively affected by
alignment while Arulampalam et al (2009) observe that being an aligned and swing state
translates into 16 higher center-state transfers (compared to being unaligned and non-
swing)
The second aforesaid concern that we want to solve is to isolate the effect that
alignment per se has on transfers and to ensure that causality runs in the desired direction To
do that we apply a regression discontinuity design (RDD)1 which allows us to benefit from
the relatively milder assumptions that it requires
The empirical strategy of our paper relies on data on capital transfers received by
Spanish municipalities during two legislatures (2000-2003 and 2004-2007) from threedifferent upper-level administrations (central regional and upper-local) Although there are
two recent contributions studying the effect of partisan alignment on intergovernmental
transfers in Spain Soleacute-Olleacute and Sorribas Navarro (2008a 2008b)2 their main limitation is
the inability to disentangle if larger transfers are explained by higher political support (larger
1 This strategy is described in detail in Lee and Lemieux (2010)2 Both studies are based on a model of political competition where grants to aligned municipalities are assumedto be capable to extract more votes than grants to municipalities represented by opposition parties As proven in
Soleacute-Olleacute and Sorribas-Navarro (2008a) the relatively higher electoral reward of politically alignedmunicipalities leads upper layer governments to transfer larger grants to them
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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4
winning margins) or merely by partisan alignment Furthermore the RD estimates that we
obtain are more credible than the ones from ldquonatural experimentsrdquo 3 like the differences-in-
differences used in Soleacute-Olleacute and Sorribas-Navarro (2008a) because the RDD can be
considered as a local randomized experiment in which the (randomized) variation observed in
the political alignment of municipalities is imprecisely controlled by individuals Therefore
the contribution of our paper is not merely to present additional empirical evidence on the
Spanish case but more importantly to provide more robust results through a neat explanatory
variable (partisan alignment)
The clear advantages of the RDD that we have exposed have made it a popular
econometric tool for researchers In the political economy field it has not been widely used
but there are a few studies that apply this strategy to examine the effects of a number ofvariables on government expenditures Albouy (2009) for instance analyses the effect that
the party-identity of the legislator has on the allocation of federal expenditures Ferreira and
Gyourko (2009) test for US municipalities if being the mayor a Democrat or a Republican
affects the allocation of local public spending For Sweden Pettersson-Lidbom (2008)
presents evidence that party control has a causal effect on economic outcomes more
precisely on the level of public expenditures and tax revenues Additionally there are two
applied studies that we consider to be close to ours as they both apply a RDD to examine theeffects of partisan alignment on intergovernmental transfers Migueis (2010) for Portugal
and Brollo and Nannicini (2010) for Brazil We consider we improve upon existing literature
for several reasons First of all while Migueis (2010) considers the causal effect of alignment
on grants to be homogeneous we take a more complex approach by testing the possibility that
this effect is heterogeneous This strategy is also found in the paper by Brollo and Nannicini
where they focus on two dimensions which could affect the impact of alignment on transfers
the value of political capital for the central government and the impact of transfers on
electoral outcomes However our study differs from the latter because we center in a very
specific and different source of heterogeneity which may be more relevant for the Spanish
case clientelism Clientelism is a salient issue in the Spanish socio-economic context and we
think it may be strategically used jointly with partisan tactics to influence electoral results
When clientelistic strategies are accounted for in our benchmark ldquopolitical machinesrdquo not
only allocate transfers based on partisan ties but also on the political credit they can claim and
their ability to monitor their constituentsrsquo votes To undertake this part of our study we draw
3 The formal proof of the lsquosuperiorityrsquo of RDD over lsquonatural experimentsrsquo is in Lee (2008)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 530
5
on ideas from Diaz-Cayeros Magaloni and Weingast (2006) Stokes (2005 2007) Brusco
Nazareno and Stokes (2004) and Soleacute-Olleacute and Sorribas-Navarro (2008a) Based on these
studies we contrast four hypotheses We examine the possibility that the treatment effect of
political alignment on transfers may be larger in poorer municipalities smaller
municipalities municipalities aligned at all levels of government and municipalities with
lower reliance on intergovernmental transfers (eg those with a lower debt burden)
Moreover traditionally Spanish left-wing parties have been accused more often of using
clientelist strategies than right-wing parties so we also test if the political color of the grantor
has an impact on the causal effect of alignment on grants Finally the last hypothesis we
contrast is whether a majority government is more able to allocate transfers on partisan
grounds than a coalition government
To summarize the findings of our paper our first set of results show through RD
estimates that being an aligned municipality has a positive effect on the amount of transfers
received by lower-level governments This impact is the largest in the case of transfers
allocated by the regional governments while the lowest impact is found for central
government transfers Thanks to an increase on the sample size and to the use of the RDD we
consider these results to be more robust than those in previous studies Concerning the impact
of clientelism on the causal impact of alignment we do not find any evidence of it when welook at central transfers However for regional and upper-level transfers we do find evidence
that the sharp increase on transfers observed in aligned municipalities is greater for smaller
municipalities This effect is also larger for left-wing grantors (compared to right-wing ones)
at the regional level
The remaining paper is structured as follows In section 2 we establish the relevance
of clientelism for our analysis Section 31 contains some brief background information on
Spanish institutions (electoral processes) and intergovernmental grants In section 32 wediscuss the empirical strategy Section 4 presents our main findings as well as the tests that
validate our analysis We conclude with section 5
2 The role of clientelism in Spain heterogeneous effects of partisan alignment
A large part of the Spanish public opinion presumes that the allocation of public
spending in the country is largely influenced by clientelistic ties between voters and
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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6
politicians Political clientelism is often cited by Spanish newspapers and its persistence in
this country has its strong roots in the well-known caciquismo of Restoration times -during
the late 19th and early 20th century4 Due to socio-economic changes nowadays traditional
clientelism (based on a peasant clientele system) has been replaced by a modern form of
territorial clientelism also known as ldquobroker clientelismrdquo In her study of Spanish clientelism
Blakeley (2001) explains how the Partido Popular (peoplersquos party) has strategically targeted
Galicia for decades while the Partido Socialista Obrero Espantildeol (socialist party) has
traditionally done so in Andalusia The Andalusian case is frequently illustrated through the
agricultural unemployment payment scheme (PER5) while Galician clientelism is especially
in the form of employment to private business closely linked with the Partido Popular6 In her
text Blakeley also notices the wide-spread accusations of clientelism posed to a long-lasting
ruling party in Catalonia Convergegravencia i Unioacute
There are two dimensions that one should take into account when distinguishing
between clientelism and other related concepts such as pork-barreling and rent-seeking the
scope (how narrow the group of beneficiaries is) and the directedness of the exchange 7
Hence clientelism is based on a quid pro quo arrangement between the patron (politician) and
the client (the voter) where they exchange goods for votes this is made ldquonot simply to seek
but rather to directly reward [electoral] supportrdquo All in all ldquoeven a very lsquobroadrsquo policy maybe lsquoclientelisticrsquo while even very narrow targeting may notrdquo So even broad project grants
such as the ones financed through intergovernmental transfers can be used by governments to
tie the hands of their electorate8
4 For a broader description of the transition from traditional clientelism to partisan clientelism in Spain seeCazorla (1994)5
This agrarian subsidy was implemented by the Andalusian regional government ( Junta de Andaluciacutea) In 1996it was renamed to AEPSA and it extended its scope to other autonomous communities although Andalusia stillreceives a large share of it6 Hopkin (2001) and Corzo (2002) also cite the Galician and Andalusian cases as examples of ldquomodernrdquoclientelism in Spain Robles Egea(2003) focuses on political clientelism in Andalusia7 See Carroll and Lyne (2006) for further discussion on this issue8 We quote two examples extracted from Spanish newspapers to illustrate how transfers can be used withclientelistic purposes both refer to clientelism at the upper-local level The first one is a statement made by EnricMorera a deputy in Les Corts Valencianes (the Valencian regional government)
ldquo(hellip) we have three diputaciones with no competencies who only serve to provide jobs for advisors andtrustworthy people who mandate and in addition the public funds they have at their disposal are used as a toolto preform political clientelism and propaganda of those who are in powerrdquo El Periogravedic 17012011
(httpwwwelperiodiccomnoticias102792_morera-psoe-hablan-acabar-autonomias-pero-diputaciones-nidos-deficit-clientelismo-politicohtml)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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7
To present the above ideas in a formal way we present a model borrowing ideas from
Stokes (2005 2007) and Diaz-Cayeros Magaloni and Weingast (2006) We start with a one-
shot game with two actors voters and parties Voters have ideology xi there are two parties 1
(incumbent) or 2 (opposition) who compete to head an upper-tier government (in our study
central regional or upper-local levels) Votersrsquo preferences are as follow
ui= αi times (-12(vi-xi)2) + (1- αi ) times gi(θ micro)
where vi=x1x2 is the citizenrsquos decision to vote for the clientelist party or the
opposition xi represents the voterrsquos ideology whose weight is α ϵ[01] Voters also get utility
from a potential reward gi=0 g(θ micro) depending on whether the clientelist party wins or
not In our study the reward corresponds to intergovernmental transfers As in Diaz-Cayeros
Magaloni and Weingast (2006) failure to support the clientelist party translates into lack of
reward ie punishment through lower funds Furthermore the reward may in turn be
influenced by two factors the political credit (θ) that the grantor can claim when giving the
reward and the partyrsquos ability (micro) to observe the citizenrsquos vote The reward function is
increasing in both factors Stokesrsquo model presumes that ldquoa personrsquos vote is (hellip) perfectly
observable by political partiesrdquo but in a democracy with secret ballot elections like Spain
this is very unlikely to occur However as pointed by Brusco Nazareno and Stokes (2004)
clientelistic strategies can still work under those circumstances This is possible because
ldquoclientelist parties compensate for the inability to observe the vote directly by observing a
range of other actions and behaviors (hellip) that allow party operatives to make good guessesrdquo
In multi-government systems the lower level representatives (the mayors) may be seen as
intermediaries of the upper-level governments and their proximity to citizens makes them
more capable to perceive their constituentsrsquo actions
All in all the timing of the game can be easily summarized in two stages At the
beginning of the first stage t=1 electoral campaigns take place and politicians signal their
The second example refers to a complaint raised by a representative in the diputacioacuten de Castilla-la-ManchaMario Gonzaacutelez Somoano (peoplesrsquo party) to the representative of public works of the diputacioacuten AacutengelMoreno(socialist party) Gonzaacutelez Somoano complains because in his village Gascuentildea there is an emergencysituation as one of the streets is in an extremely bad condition and it needs to be asphalted
ldquoGonzaacutelez Somoano replied that (hellip) they had undertaken asphalt works in neighboring villages of Gascuentildeabut governed by socialist mayors accusing of acting more in lsquotheir villagesrsquo than in others and reminding that allthe roads from Cantalojas (municipality whose mayor is Moreno) had been asphalted the previous yearrdquoGuadaqueacute17072009(httpwwwguadaquecomindexphpoption=com_contentampview=articleampcatid=33Aprovinciaampid=36823Ael-pp-acusa-al-psoe-de-clientelismo-y-rafael-esteban-llama-al-portavoz-
payasoampItemid=54)
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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2
1 Introduction
A good process of fiscal decentralization has to ensure that constituent units within a
federal system are provided with enough resources to meet their expenditure responsibilities
In most federations local governments have a weak tax base so in order to provide publicgoods and services to their citizens they rely significantly on transfers from upper-level
governments According to the normative criterion of fiscal federalism the allocation of
grants has to guarantee economic efficiency and equity amongst the members of the
federation (Musgrave 1959 1983 Oates 1972) Nonetheless the positive approach claims
that transfers are distributed by non-benevolent agents who are not driven by economic but
political interests (Grossman 1994) In line with this last view our paper evaluates to which
extent the distribution of grants is largely conditional on the partisan alignment betweendonor and recipient
The political economy literature has identified four main political determinants of the
regional allocation of national resources The first one is legislative representation
(Ansolabehere Gerber and Snyder 2003 Porto and Sanguinetti 2003) A second factor is
the share of ldquoswing votersrdquo versus ldquocore votersrdquo in constituencies This idea has been
analyzed in different ways through theoretical papers based on electoral competition
(Lindbeck and Weibull 1987 Dixit and Londregan 1998 Cox and McCubbis 1986)
through theoretical papers based on legislative bargaining (Weingast Shepsle and Johnsen
1981) through empirical studies (Schady 2000 Case 2001 Stroumlmberg 2001 Johansson
2003) which have provided mixed and inconclusive evidence until now Another determinant
is the citizensrsquo level of information and participation in the electoral system (Besley and
Burgess 2002 Stroumlmberg 2004) And last but not least it is also relevant the party affiliation
of the different government tiers (Grossman 1994 Levitt and Snyder 1995 Worthington and
Dollery 1998 Khemani 2003 Arulampalam et al 2009) Two main problems arise fromthis literature The first one is that measuring the concept of core and swing voters has proven
to be a difficult task The second issue is that whenever election results are used as variables
to explain the regional distribution of transfers one should correct for endogeneity problems
Our study presents an empirical analysis that aims at overcoming the two
aforementioned problems Firstly instead of taking a ldquoswing vs core voterrdquo approach the
explanatory variable for intergovernmental transfers is the political alignment between
municipalities and their upper-tiers There are two main reasons to believe that the
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 330
3
distribution of transfers may be biased towards co-partisans On the one hand following the
intuition beneath Diaz-Cayeros Magaloni and Weingast (2006) in certain circumstances the
incumbent party may have strong incentives to use a mechanism of punishments and rewards
to maintain electoral support Hence municipalities who defect to the opposition (ie
unaligned municipalities) should receive lower transfers as means of punishment This idea is
at odds with the swing voter models of Dixit and Londregan and Lindbeck and Weibull On
the other hand the distribution of grants on partisan grounds is also influenced by the fact that
voters have incomplete information about which tier of government is the source of the grant
In this situation the grantor may not be able to claim much (or even none) political credit for
the grant If there is no credit leakage (ie the grantor cannot claim his credit) he finds it more
profitable to distribute grants to aligned municipalities However if the leakage is large
enough the incumbent grantor may consider sending funds to unaligned municipalities as he
could still get some electoral reward from that The empirical evidence extracted from some
of the above mentioned studies concludes that the allocation of intergovernmental grants is
indeed skewed in favor of aligned municipalities For instance Khemani (2003) finds that
transfers subject to less stringent rules (more discretionary) are positively affected by
alignment while Arulampalam et al (2009) observe that being an aligned and swing state
translates into 16 higher center-state transfers (compared to being unaligned and non-
swing)
The second aforesaid concern that we want to solve is to isolate the effect that
alignment per se has on transfers and to ensure that causality runs in the desired direction To
do that we apply a regression discontinuity design (RDD)1 which allows us to benefit from
the relatively milder assumptions that it requires
The empirical strategy of our paper relies on data on capital transfers received by
Spanish municipalities during two legislatures (2000-2003 and 2004-2007) from threedifferent upper-level administrations (central regional and upper-local) Although there are
two recent contributions studying the effect of partisan alignment on intergovernmental
transfers in Spain Soleacute-Olleacute and Sorribas Navarro (2008a 2008b)2 their main limitation is
the inability to disentangle if larger transfers are explained by higher political support (larger
1 This strategy is described in detail in Lee and Lemieux (2010)2 Both studies are based on a model of political competition where grants to aligned municipalities are assumedto be capable to extract more votes than grants to municipalities represented by opposition parties As proven in
Soleacute-Olleacute and Sorribas-Navarro (2008a) the relatively higher electoral reward of politically alignedmunicipalities leads upper layer governments to transfer larger grants to them
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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4
winning margins) or merely by partisan alignment Furthermore the RD estimates that we
obtain are more credible than the ones from ldquonatural experimentsrdquo 3 like the differences-in-
differences used in Soleacute-Olleacute and Sorribas-Navarro (2008a) because the RDD can be
considered as a local randomized experiment in which the (randomized) variation observed in
the political alignment of municipalities is imprecisely controlled by individuals Therefore
the contribution of our paper is not merely to present additional empirical evidence on the
Spanish case but more importantly to provide more robust results through a neat explanatory
variable (partisan alignment)
The clear advantages of the RDD that we have exposed have made it a popular
econometric tool for researchers In the political economy field it has not been widely used
but there are a few studies that apply this strategy to examine the effects of a number ofvariables on government expenditures Albouy (2009) for instance analyses the effect that
the party-identity of the legislator has on the allocation of federal expenditures Ferreira and
Gyourko (2009) test for US municipalities if being the mayor a Democrat or a Republican
affects the allocation of local public spending For Sweden Pettersson-Lidbom (2008)
presents evidence that party control has a causal effect on economic outcomes more
precisely on the level of public expenditures and tax revenues Additionally there are two
applied studies that we consider to be close to ours as they both apply a RDD to examine theeffects of partisan alignment on intergovernmental transfers Migueis (2010) for Portugal
and Brollo and Nannicini (2010) for Brazil We consider we improve upon existing literature
for several reasons First of all while Migueis (2010) considers the causal effect of alignment
on grants to be homogeneous we take a more complex approach by testing the possibility that
this effect is heterogeneous This strategy is also found in the paper by Brollo and Nannicini
where they focus on two dimensions which could affect the impact of alignment on transfers
the value of political capital for the central government and the impact of transfers on
electoral outcomes However our study differs from the latter because we center in a very
specific and different source of heterogeneity which may be more relevant for the Spanish
case clientelism Clientelism is a salient issue in the Spanish socio-economic context and we
think it may be strategically used jointly with partisan tactics to influence electoral results
When clientelistic strategies are accounted for in our benchmark ldquopolitical machinesrdquo not
only allocate transfers based on partisan ties but also on the political credit they can claim and
their ability to monitor their constituentsrsquo votes To undertake this part of our study we draw
3 The formal proof of the lsquosuperiorityrsquo of RDD over lsquonatural experimentsrsquo is in Lee (2008)
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5
on ideas from Diaz-Cayeros Magaloni and Weingast (2006) Stokes (2005 2007) Brusco
Nazareno and Stokes (2004) and Soleacute-Olleacute and Sorribas-Navarro (2008a) Based on these
studies we contrast four hypotheses We examine the possibility that the treatment effect of
political alignment on transfers may be larger in poorer municipalities smaller
municipalities municipalities aligned at all levels of government and municipalities with
lower reliance on intergovernmental transfers (eg those with a lower debt burden)
Moreover traditionally Spanish left-wing parties have been accused more often of using
clientelist strategies than right-wing parties so we also test if the political color of the grantor
has an impact on the causal effect of alignment on grants Finally the last hypothesis we
contrast is whether a majority government is more able to allocate transfers on partisan
grounds than a coalition government
To summarize the findings of our paper our first set of results show through RD
estimates that being an aligned municipality has a positive effect on the amount of transfers
received by lower-level governments This impact is the largest in the case of transfers
allocated by the regional governments while the lowest impact is found for central
government transfers Thanks to an increase on the sample size and to the use of the RDD we
consider these results to be more robust than those in previous studies Concerning the impact
of clientelism on the causal impact of alignment we do not find any evidence of it when welook at central transfers However for regional and upper-level transfers we do find evidence
that the sharp increase on transfers observed in aligned municipalities is greater for smaller
municipalities This effect is also larger for left-wing grantors (compared to right-wing ones)
at the regional level
The remaining paper is structured as follows In section 2 we establish the relevance
of clientelism for our analysis Section 31 contains some brief background information on
Spanish institutions (electoral processes) and intergovernmental grants In section 32 wediscuss the empirical strategy Section 4 presents our main findings as well as the tests that
validate our analysis We conclude with section 5
2 The role of clientelism in Spain heterogeneous effects of partisan alignment
A large part of the Spanish public opinion presumes that the allocation of public
spending in the country is largely influenced by clientelistic ties between voters and
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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6
politicians Political clientelism is often cited by Spanish newspapers and its persistence in
this country has its strong roots in the well-known caciquismo of Restoration times -during
the late 19th and early 20th century4 Due to socio-economic changes nowadays traditional
clientelism (based on a peasant clientele system) has been replaced by a modern form of
territorial clientelism also known as ldquobroker clientelismrdquo In her study of Spanish clientelism
Blakeley (2001) explains how the Partido Popular (peoplersquos party) has strategically targeted
Galicia for decades while the Partido Socialista Obrero Espantildeol (socialist party) has
traditionally done so in Andalusia The Andalusian case is frequently illustrated through the
agricultural unemployment payment scheme (PER5) while Galician clientelism is especially
in the form of employment to private business closely linked with the Partido Popular6 In her
text Blakeley also notices the wide-spread accusations of clientelism posed to a long-lasting
ruling party in Catalonia Convergegravencia i Unioacute
There are two dimensions that one should take into account when distinguishing
between clientelism and other related concepts such as pork-barreling and rent-seeking the
scope (how narrow the group of beneficiaries is) and the directedness of the exchange 7
Hence clientelism is based on a quid pro quo arrangement between the patron (politician) and
the client (the voter) where they exchange goods for votes this is made ldquonot simply to seek
but rather to directly reward [electoral] supportrdquo All in all ldquoeven a very lsquobroadrsquo policy maybe lsquoclientelisticrsquo while even very narrow targeting may notrdquo So even broad project grants
such as the ones financed through intergovernmental transfers can be used by governments to
tie the hands of their electorate8
4 For a broader description of the transition from traditional clientelism to partisan clientelism in Spain seeCazorla (1994)5
This agrarian subsidy was implemented by the Andalusian regional government ( Junta de Andaluciacutea) In 1996it was renamed to AEPSA and it extended its scope to other autonomous communities although Andalusia stillreceives a large share of it6 Hopkin (2001) and Corzo (2002) also cite the Galician and Andalusian cases as examples of ldquomodernrdquoclientelism in Spain Robles Egea(2003) focuses on political clientelism in Andalusia7 See Carroll and Lyne (2006) for further discussion on this issue8 We quote two examples extracted from Spanish newspapers to illustrate how transfers can be used withclientelistic purposes both refer to clientelism at the upper-local level The first one is a statement made by EnricMorera a deputy in Les Corts Valencianes (the Valencian regional government)
ldquo(hellip) we have three diputaciones with no competencies who only serve to provide jobs for advisors andtrustworthy people who mandate and in addition the public funds they have at their disposal are used as a toolto preform political clientelism and propaganda of those who are in powerrdquo El Periogravedic 17012011
(httpwwwelperiodiccomnoticias102792_morera-psoe-hablan-acabar-autonomias-pero-diputaciones-nidos-deficit-clientelismo-politicohtml)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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7
To present the above ideas in a formal way we present a model borrowing ideas from
Stokes (2005 2007) and Diaz-Cayeros Magaloni and Weingast (2006) We start with a one-
shot game with two actors voters and parties Voters have ideology xi there are two parties 1
(incumbent) or 2 (opposition) who compete to head an upper-tier government (in our study
central regional or upper-local levels) Votersrsquo preferences are as follow
ui= αi times (-12(vi-xi)2) + (1- αi ) times gi(θ micro)
where vi=x1x2 is the citizenrsquos decision to vote for the clientelist party or the
opposition xi represents the voterrsquos ideology whose weight is α ϵ[01] Voters also get utility
from a potential reward gi=0 g(θ micro) depending on whether the clientelist party wins or
not In our study the reward corresponds to intergovernmental transfers As in Diaz-Cayeros
Magaloni and Weingast (2006) failure to support the clientelist party translates into lack of
reward ie punishment through lower funds Furthermore the reward may in turn be
influenced by two factors the political credit (θ) that the grantor can claim when giving the
reward and the partyrsquos ability (micro) to observe the citizenrsquos vote The reward function is
increasing in both factors Stokesrsquo model presumes that ldquoa personrsquos vote is (hellip) perfectly
observable by political partiesrdquo but in a democracy with secret ballot elections like Spain
this is very unlikely to occur However as pointed by Brusco Nazareno and Stokes (2004)
clientelistic strategies can still work under those circumstances This is possible because
ldquoclientelist parties compensate for the inability to observe the vote directly by observing a
range of other actions and behaviors (hellip) that allow party operatives to make good guessesrdquo
In multi-government systems the lower level representatives (the mayors) may be seen as
intermediaries of the upper-level governments and their proximity to citizens makes them
more capable to perceive their constituentsrsquo actions
All in all the timing of the game can be easily summarized in two stages At the
beginning of the first stage t=1 electoral campaigns take place and politicians signal their
The second example refers to a complaint raised by a representative in the diputacioacuten de Castilla-la-ManchaMario Gonzaacutelez Somoano (peoplesrsquo party) to the representative of public works of the diputacioacuten AacutengelMoreno(socialist party) Gonzaacutelez Somoano complains because in his village Gascuentildea there is an emergencysituation as one of the streets is in an extremely bad condition and it needs to be asphalted
ldquoGonzaacutelez Somoano replied that (hellip) they had undertaken asphalt works in neighboring villages of Gascuentildeabut governed by socialist mayors accusing of acting more in lsquotheir villagesrsquo than in others and reminding that allthe roads from Cantalojas (municipality whose mayor is Moreno) had been asphalted the previous yearrdquoGuadaqueacute17072009(httpwwwguadaquecomindexphpoption=com_contentampview=articleampcatid=33Aprovinciaampid=36823Ael-pp-acusa-al-psoe-de-clientelismo-y-rafael-esteban-llama-al-portavoz-
payasoampItemid=54)
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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3
distribution of transfers may be biased towards co-partisans On the one hand following the
intuition beneath Diaz-Cayeros Magaloni and Weingast (2006) in certain circumstances the
incumbent party may have strong incentives to use a mechanism of punishments and rewards
to maintain electoral support Hence municipalities who defect to the opposition (ie
unaligned municipalities) should receive lower transfers as means of punishment This idea is
at odds with the swing voter models of Dixit and Londregan and Lindbeck and Weibull On
the other hand the distribution of grants on partisan grounds is also influenced by the fact that
voters have incomplete information about which tier of government is the source of the grant
In this situation the grantor may not be able to claim much (or even none) political credit for
the grant If there is no credit leakage (ie the grantor cannot claim his credit) he finds it more
profitable to distribute grants to aligned municipalities However if the leakage is large
enough the incumbent grantor may consider sending funds to unaligned municipalities as he
could still get some electoral reward from that The empirical evidence extracted from some
of the above mentioned studies concludes that the allocation of intergovernmental grants is
indeed skewed in favor of aligned municipalities For instance Khemani (2003) finds that
transfers subject to less stringent rules (more discretionary) are positively affected by
alignment while Arulampalam et al (2009) observe that being an aligned and swing state
translates into 16 higher center-state transfers (compared to being unaligned and non-
swing)
The second aforesaid concern that we want to solve is to isolate the effect that
alignment per se has on transfers and to ensure that causality runs in the desired direction To
do that we apply a regression discontinuity design (RDD)1 which allows us to benefit from
the relatively milder assumptions that it requires
The empirical strategy of our paper relies on data on capital transfers received by
Spanish municipalities during two legislatures (2000-2003 and 2004-2007) from threedifferent upper-level administrations (central regional and upper-local) Although there are
two recent contributions studying the effect of partisan alignment on intergovernmental
transfers in Spain Soleacute-Olleacute and Sorribas Navarro (2008a 2008b)2 their main limitation is
the inability to disentangle if larger transfers are explained by higher political support (larger
1 This strategy is described in detail in Lee and Lemieux (2010)2 Both studies are based on a model of political competition where grants to aligned municipalities are assumedto be capable to extract more votes than grants to municipalities represented by opposition parties As proven in
Soleacute-Olleacute and Sorribas-Navarro (2008a) the relatively higher electoral reward of politically alignedmunicipalities leads upper layer governments to transfer larger grants to them
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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4
winning margins) or merely by partisan alignment Furthermore the RD estimates that we
obtain are more credible than the ones from ldquonatural experimentsrdquo 3 like the differences-in-
differences used in Soleacute-Olleacute and Sorribas-Navarro (2008a) because the RDD can be
considered as a local randomized experiment in which the (randomized) variation observed in
the political alignment of municipalities is imprecisely controlled by individuals Therefore
the contribution of our paper is not merely to present additional empirical evidence on the
Spanish case but more importantly to provide more robust results through a neat explanatory
variable (partisan alignment)
The clear advantages of the RDD that we have exposed have made it a popular
econometric tool for researchers In the political economy field it has not been widely used
but there are a few studies that apply this strategy to examine the effects of a number ofvariables on government expenditures Albouy (2009) for instance analyses the effect that
the party-identity of the legislator has on the allocation of federal expenditures Ferreira and
Gyourko (2009) test for US municipalities if being the mayor a Democrat or a Republican
affects the allocation of local public spending For Sweden Pettersson-Lidbom (2008)
presents evidence that party control has a causal effect on economic outcomes more
precisely on the level of public expenditures and tax revenues Additionally there are two
applied studies that we consider to be close to ours as they both apply a RDD to examine theeffects of partisan alignment on intergovernmental transfers Migueis (2010) for Portugal
and Brollo and Nannicini (2010) for Brazil We consider we improve upon existing literature
for several reasons First of all while Migueis (2010) considers the causal effect of alignment
on grants to be homogeneous we take a more complex approach by testing the possibility that
this effect is heterogeneous This strategy is also found in the paper by Brollo and Nannicini
where they focus on two dimensions which could affect the impact of alignment on transfers
the value of political capital for the central government and the impact of transfers on
electoral outcomes However our study differs from the latter because we center in a very
specific and different source of heterogeneity which may be more relevant for the Spanish
case clientelism Clientelism is a salient issue in the Spanish socio-economic context and we
think it may be strategically used jointly with partisan tactics to influence electoral results
When clientelistic strategies are accounted for in our benchmark ldquopolitical machinesrdquo not
only allocate transfers based on partisan ties but also on the political credit they can claim and
their ability to monitor their constituentsrsquo votes To undertake this part of our study we draw
3 The formal proof of the lsquosuperiorityrsquo of RDD over lsquonatural experimentsrsquo is in Lee (2008)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 530
5
on ideas from Diaz-Cayeros Magaloni and Weingast (2006) Stokes (2005 2007) Brusco
Nazareno and Stokes (2004) and Soleacute-Olleacute and Sorribas-Navarro (2008a) Based on these
studies we contrast four hypotheses We examine the possibility that the treatment effect of
political alignment on transfers may be larger in poorer municipalities smaller
municipalities municipalities aligned at all levels of government and municipalities with
lower reliance on intergovernmental transfers (eg those with a lower debt burden)
Moreover traditionally Spanish left-wing parties have been accused more often of using
clientelist strategies than right-wing parties so we also test if the political color of the grantor
has an impact on the causal effect of alignment on grants Finally the last hypothesis we
contrast is whether a majority government is more able to allocate transfers on partisan
grounds than a coalition government
To summarize the findings of our paper our first set of results show through RD
estimates that being an aligned municipality has a positive effect on the amount of transfers
received by lower-level governments This impact is the largest in the case of transfers
allocated by the regional governments while the lowest impact is found for central
government transfers Thanks to an increase on the sample size and to the use of the RDD we
consider these results to be more robust than those in previous studies Concerning the impact
of clientelism on the causal impact of alignment we do not find any evidence of it when welook at central transfers However for regional and upper-level transfers we do find evidence
that the sharp increase on transfers observed in aligned municipalities is greater for smaller
municipalities This effect is also larger for left-wing grantors (compared to right-wing ones)
at the regional level
The remaining paper is structured as follows In section 2 we establish the relevance
of clientelism for our analysis Section 31 contains some brief background information on
Spanish institutions (electoral processes) and intergovernmental grants In section 32 wediscuss the empirical strategy Section 4 presents our main findings as well as the tests that
validate our analysis We conclude with section 5
2 The role of clientelism in Spain heterogeneous effects of partisan alignment
A large part of the Spanish public opinion presumes that the allocation of public
spending in the country is largely influenced by clientelistic ties between voters and
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 630
6
politicians Political clientelism is often cited by Spanish newspapers and its persistence in
this country has its strong roots in the well-known caciquismo of Restoration times -during
the late 19th and early 20th century4 Due to socio-economic changes nowadays traditional
clientelism (based on a peasant clientele system) has been replaced by a modern form of
territorial clientelism also known as ldquobroker clientelismrdquo In her study of Spanish clientelism
Blakeley (2001) explains how the Partido Popular (peoplersquos party) has strategically targeted
Galicia for decades while the Partido Socialista Obrero Espantildeol (socialist party) has
traditionally done so in Andalusia The Andalusian case is frequently illustrated through the
agricultural unemployment payment scheme (PER5) while Galician clientelism is especially
in the form of employment to private business closely linked with the Partido Popular6 In her
text Blakeley also notices the wide-spread accusations of clientelism posed to a long-lasting
ruling party in Catalonia Convergegravencia i Unioacute
There are two dimensions that one should take into account when distinguishing
between clientelism and other related concepts such as pork-barreling and rent-seeking the
scope (how narrow the group of beneficiaries is) and the directedness of the exchange 7
Hence clientelism is based on a quid pro quo arrangement between the patron (politician) and
the client (the voter) where they exchange goods for votes this is made ldquonot simply to seek
but rather to directly reward [electoral] supportrdquo All in all ldquoeven a very lsquobroadrsquo policy maybe lsquoclientelisticrsquo while even very narrow targeting may notrdquo So even broad project grants
such as the ones financed through intergovernmental transfers can be used by governments to
tie the hands of their electorate8
4 For a broader description of the transition from traditional clientelism to partisan clientelism in Spain seeCazorla (1994)5
This agrarian subsidy was implemented by the Andalusian regional government ( Junta de Andaluciacutea) In 1996it was renamed to AEPSA and it extended its scope to other autonomous communities although Andalusia stillreceives a large share of it6 Hopkin (2001) and Corzo (2002) also cite the Galician and Andalusian cases as examples of ldquomodernrdquoclientelism in Spain Robles Egea(2003) focuses on political clientelism in Andalusia7 See Carroll and Lyne (2006) for further discussion on this issue8 We quote two examples extracted from Spanish newspapers to illustrate how transfers can be used withclientelistic purposes both refer to clientelism at the upper-local level The first one is a statement made by EnricMorera a deputy in Les Corts Valencianes (the Valencian regional government)
ldquo(hellip) we have three diputaciones with no competencies who only serve to provide jobs for advisors andtrustworthy people who mandate and in addition the public funds they have at their disposal are used as a toolto preform political clientelism and propaganda of those who are in powerrdquo El Periogravedic 17012011
(httpwwwelperiodiccomnoticias102792_morera-psoe-hablan-acabar-autonomias-pero-diputaciones-nidos-deficit-clientelismo-politicohtml)
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7
To present the above ideas in a formal way we present a model borrowing ideas from
Stokes (2005 2007) and Diaz-Cayeros Magaloni and Weingast (2006) We start with a one-
shot game with two actors voters and parties Voters have ideology xi there are two parties 1
(incumbent) or 2 (opposition) who compete to head an upper-tier government (in our study
central regional or upper-local levels) Votersrsquo preferences are as follow
ui= αi times (-12(vi-xi)2) + (1- αi ) times gi(θ micro)
where vi=x1x2 is the citizenrsquos decision to vote for the clientelist party or the
opposition xi represents the voterrsquos ideology whose weight is α ϵ[01] Voters also get utility
from a potential reward gi=0 g(θ micro) depending on whether the clientelist party wins or
not In our study the reward corresponds to intergovernmental transfers As in Diaz-Cayeros
Magaloni and Weingast (2006) failure to support the clientelist party translates into lack of
reward ie punishment through lower funds Furthermore the reward may in turn be
influenced by two factors the political credit (θ) that the grantor can claim when giving the
reward and the partyrsquos ability (micro) to observe the citizenrsquos vote The reward function is
increasing in both factors Stokesrsquo model presumes that ldquoa personrsquos vote is (hellip) perfectly
observable by political partiesrdquo but in a democracy with secret ballot elections like Spain
this is very unlikely to occur However as pointed by Brusco Nazareno and Stokes (2004)
clientelistic strategies can still work under those circumstances This is possible because
ldquoclientelist parties compensate for the inability to observe the vote directly by observing a
range of other actions and behaviors (hellip) that allow party operatives to make good guessesrdquo
In multi-government systems the lower level representatives (the mayors) may be seen as
intermediaries of the upper-level governments and their proximity to citizens makes them
more capable to perceive their constituentsrsquo actions
All in all the timing of the game can be easily summarized in two stages At the
beginning of the first stage t=1 electoral campaigns take place and politicians signal their
The second example refers to a complaint raised by a representative in the diputacioacuten de Castilla-la-ManchaMario Gonzaacutelez Somoano (peoplesrsquo party) to the representative of public works of the diputacioacuten AacutengelMoreno(socialist party) Gonzaacutelez Somoano complains because in his village Gascuentildea there is an emergencysituation as one of the streets is in an extremely bad condition and it needs to be asphalted
ldquoGonzaacutelez Somoano replied that (hellip) they had undertaken asphalt works in neighboring villages of Gascuentildeabut governed by socialist mayors accusing of acting more in lsquotheir villagesrsquo than in others and reminding that allthe roads from Cantalojas (municipality whose mayor is Moreno) had been asphalted the previous yearrdquoGuadaqueacute17072009(httpwwwguadaquecomindexphpoption=com_contentampview=articleampcatid=33Aprovinciaampid=36823Ael-pp-acusa-al-psoe-de-clientelismo-y-rafael-esteban-llama-al-portavoz-
payasoampItemid=54)
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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4
winning margins) or merely by partisan alignment Furthermore the RD estimates that we
obtain are more credible than the ones from ldquonatural experimentsrdquo 3 like the differences-in-
differences used in Soleacute-Olleacute and Sorribas-Navarro (2008a) because the RDD can be
considered as a local randomized experiment in which the (randomized) variation observed in
the political alignment of municipalities is imprecisely controlled by individuals Therefore
the contribution of our paper is not merely to present additional empirical evidence on the
Spanish case but more importantly to provide more robust results through a neat explanatory
variable (partisan alignment)
The clear advantages of the RDD that we have exposed have made it a popular
econometric tool for researchers In the political economy field it has not been widely used
but there are a few studies that apply this strategy to examine the effects of a number ofvariables on government expenditures Albouy (2009) for instance analyses the effect that
the party-identity of the legislator has on the allocation of federal expenditures Ferreira and
Gyourko (2009) test for US municipalities if being the mayor a Democrat or a Republican
affects the allocation of local public spending For Sweden Pettersson-Lidbom (2008)
presents evidence that party control has a causal effect on economic outcomes more
precisely on the level of public expenditures and tax revenues Additionally there are two
applied studies that we consider to be close to ours as they both apply a RDD to examine theeffects of partisan alignment on intergovernmental transfers Migueis (2010) for Portugal
and Brollo and Nannicini (2010) for Brazil We consider we improve upon existing literature
for several reasons First of all while Migueis (2010) considers the causal effect of alignment
on grants to be homogeneous we take a more complex approach by testing the possibility that
this effect is heterogeneous This strategy is also found in the paper by Brollo and Nannicini
where they focus on two dimensions which could affect the impact of alignment on transfers
the value of political capital for the central government and the impact of transfers on
electoral outcomes However our study differs from the latter because we center in a very
specific and different source of heterogeneity which may be more relevant for the Spanish
case clientelism Clientelism is a salient issue in the Spanish socio-economic context and we
think it may be strategically used jointly with partisan tactics to influence electoral results
When clientelistic strategies are accounted for in our benchmark ldquopolitical machinesrdquo not
only allocate transfers based on partisan ties but also on the political credit they can claim and
their ability to monitor their constituentsrsquo votes To undertake this part of our study we draw
3 The formal proof of the lsquosuperiorityrsquo of RDD over lsquonatural experimentsrsquo is in Lee (2008)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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5
on ideas from Diaz-Cayeros Magaloni and Weingast (2006) Stokes (2005 2007) Brusco
Nazareno and Stokes (2004) and Soleacute-Olleacute and Sorribas-Navarro (2008a) Based on these
studies we contrast four hypotheses We examine the possibility that the treatment effect of
political alignment on transfers may be larger in poorer municipalities smaller
municipalities municipalities aligned at all levels of government and municipalities with
lower reliance on intergovernmental transfers (eg those with a lower debt burden)
Moreover traditionally Spanish left-wing parties have been accused more often of using
clientelist strategies than right-wing parties so we also test if the political color of the grantor
has an impact on the causal effect of alignment on grants Finally the last hypothesis we
contrast is whether a majority government is more able to allocate transfers on partisan
grounds than a coalition government
To summarize the findings of our paper our first set of results show through RD
estimates that being an aligned municipality has a positive effect on the amount of transfers
received by lower-level governments This impact is the largest in the case of transfers
allocated by the regional governments while the lowest impact is found for central
government transfers Thanks to an increase on the sample size and to the use of the RDD we
consider these results to be more robust than those in previous studies Concerning the impact
of clientelism on the causal impact of alignment we do not find any evidence of it when welook at central transfers However for regional and upper-level transfers we do find evidence
that the sharp increase on transfers observed in aligned municipalities is greater for smaller
municipalities This effect is also larger for left-wing grantors (compared to right-wing ones)
at the regional level
The remaining paper is structured as follows In section 2 we establish the relevance
of clientelism for our analysis Section 31 contains some brief background information on
Spanish institutions (electoral processes) and intergovernmental grants In section 32 wediscuss the empirical strategy Section 4 presents our main findings as well as the tests that
validate our analysis We conclude with section 5
2 The role of clientelism in Spain heterogeneous effects of partisan alignment
A large part of the Spanish public opinion presumes that the allocation of public
spending in the country is largely influenced by clientelistic ties between voters and
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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6
politicians Political clientelism is often cited by Spanish newspapers and its persistence in
this country has its strong roots in the well-known caciquismo of Restoration times -during
the late 19th and early 20th century4 Due to socio-economic changes nowadays traditional
clientelism (based on a peasant clientele system) has been replaced by a modern form of
territorial clientelism also known as ldquobroker clientelismrdquo In her study of Spanish clientelism
Blakeley (2001) explains how the Partido Popular (peoplersquos party) has strategically targeted
Galicia for decades while the Partido Socialista Obrero Espantildeol (socialist party) has
traditionally done so in Andalusia The Andalusian case is frequently illustrated through the
agricultural unemployment payment scheme (PER5) while Galician clientelism is especially
in the form of employment to private business closely linked with the Partido Popular6 In her
text Blakeley also notices the wide-spread accusations of clientelism posed to a long-lasting
ruling party in Catalonia Convergegravencia i Unioacute
There are two dimensions that one should take into account when distinguishing
between clientelism and other related concepts such as pork-barreling and rent-seeking the
scope (how narrow the group of beneficiaries is) and the directedness of the exchange 7
Hence clientelism is based on a quid pro quo arrangement between the patron (politician) and
the client (the voter) where they exchange goods for votes this is made ldquonot simply to seek
but rather to directly reward [electoral] supportrdquo All in all ldquoeven a very lsquobroadrsquo policy maybe lsquoclientelisticrsquo while even very narrow targeting may notrdquo So even broad project grants
such as the ones financed through intergovernmental transfers can be used by governments to
tie the hands of their electorate8
4 For a broader description of the transition from traditional clientelism to partisan clientelism in Spain seeCazorla (1994)5
This agrarian subsidy was implemented by the Andalusian regional government ( Junta de Andaluciacutea) In 1996it was renamed to AEPSA and it extended its scope to other autonomous communities although Andalusia stillreceives a large share of it6 Hopkin (2001) and Corzo (2002) also cite the Galician and Andalusian cases as examples of ldquomodernrdquoclientelism in Spain Robles Egea(2003) focuses on political clientelism in Andalusia7 See Carroll and Lyne (2006) for further discussion on this issue8 We quote two examples extracted from Spanish newspapers to illustrate how transfers can be used withclientelistic purposes both refer to clientelism at the upper-local level The first one is a statement made by EnricMorera a deputy in Les Corts Valencianes (the Valencian regional government)
ldquo(hellip) we have three diputaciones with no competencies who only serve to provide jobs for advisors andtrustworthy people who mandate and in addition the public funds they have at their disposal are used as a toolto preform political clientelism and propaganda of those who are in powerrdquo El Periogravedic 17012011
(httpwwwelperiodiccomnoticias102792_morera-psoe-hablan-acabar-autonomias-pero-diputaciones-nidos-deficit-clientelismo-politicohtml)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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7
To present the above ideas in a formal way we present a model borrowing ideas from
Stokes (2005 2007) and Diaz-Cayeros Magaloni and Weingast (2006) We start with a one-
shot game with two actors voters and parties Voters have ideology xi there are two parties 1
(incumbent) or 2 (opposition) who compete to head an upper-tier government (in our study
central regional or upper-local levels) Votersrsquo preferences are as follow
ui= αi times (-12(vi-xi)2) + (1- αi ) times gi(θ micro)
where vi=x1x2 is the citizenrsquos decision to vote for the clientelist party or the
opposition xi represents the voterrsquos ideology whose weight is α ϵ[01] Voters also get utility
from a potential reward gi=0 g(θ micro) depending on whether the clientelist party wins or
not In our study the reward corresponds to intergovernmental transfers As in Diaz-Cayeros
Magaloni and Weingast (2006) failure to support the clientelist party translates into lack of
reward ie punishment through lower funds Furthermore the reward may in turn be
influenced by two factors the political credit (θ) that the grantor can claim when giving the
reward and the partyrsquos ability (micro) to observe the citizenrsquos vote The reward function is
increasing in both factors Stokesrsquo model presumes that ldquoa personrsquos vote is (hellip) perfectly
observable by political partiesrdquo but in a democracy with secret ballot elections like Spain
this is very unlikely to occur However as pointed by Brusco Nazareno and Stokes (2004)
clientelistic strategies can still work under those circumstances This is possible because
ldquoclientelist parties compensate for the inability to observe the vote directly by observing a
range of other actions and behaviors (hellip) that allow party operatives to make good guessesrdquo
In multi-government systems the lower level representatives (the mayors) may be seen as
intermediaries of the upper-level governments and their proximity to citizens makes them
more capable to perceive their constituentsrsquo actions
All in all the timing of the game can be easily summarized in two stages At the
beginning of the first stage t=1 electoral campaigns take place and politicians signal their
The second example refers to a complaint raised by a representative in the diputacioacuten de Castilla-la-ManchaMario Gonzaacutelez Somoano (peoplesrsquo party) to the representative of public works of the diputacioacuten AacutengelMoreno(socialist party) Gonzaacutelez Somoano complains because in his village Gascuentildea there is an emergencysituation as one of the streets is in an extremely bad condition and it needs to be asphalted
ldquoGonzaacutelez Somoano replied that (hellip) they had undertaken asphalt works in neighboring villages of Gascuentildeabut governed by socialist mayors accusing of acting more in lsquotheir villagesrsquo than in others and reminding that allthe roads from Cantalojas (municipality whose mayor is Moreno) had been asphalted the previous yearrdquoGuadaqueacute17072009(httpwwwguadaquecomindexphpoption=com_contentampview=articleampcatid=33Aprovinciaampid=36823Ael-pp-acusa-al-psoe-de-clientelismo-y-rafael-esteban-llama-al-portavoz-
payasoampItemid=54)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
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York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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5
on ideas from Diaz-Cayeros Magaloni and Weingast (2006) Stokes (2005 2007) Brusco
Nazareno and Stokes (2004) and Soleacute-Olleacute and Sorribas-Navarro (2008a) Based on these
studies we contrast four hypotheses We examine the possibility that the treatment effect of
political alignment on transfers may be larger in poorer municipalities smaller
municipalities municipalities aligned at all levels of government and municipalities with
lower reliance on intergovernmental transfers (eg those with a lower debt burden)
Moreover traditionally Spanish left-wing parties have been accused more often of using
clientelist strategies than right-wing parties so we also test if the political color of the grantor
has an impact on the causal effect of alignment on grants Finally the last hypothesis we
contrast is whether a majority government is more able to allocate transfers on partisan
grounds than a coalition government
To summarize the findings of our paper our first set of results show through RD
estimates that being an aligned municipality has a positive effect on the amount of transfers
received by lower-level governments This impact is the largest in the case of transfers
allocated by the regional governments while the lowest impact is found for central
government transfers Thanks to an increase on the sample size and to the use of the RDD we
consider these results to be more robust than those in previous studies Concerning the impact
of clientelism on the causal impact of alignment we do not find any evidence of it when welook at central transfers However for regional and upper-level transfers we do find evidence
that the sharp increase on transfers observed in aligned municipalities is greater for smaller
municipalities This effect is also larger for left-wing grantors (compared to right-wing ones)
at the regional level
The remaining paper is structured as follows In section 2 we establish the relevance
of clientelism for our analysis Section 31 contains some brief background information on
Spanish institutions (electoral processes) and intergovernmental grants In section 32 wediscuss the empirical strategy Section 4 presents our main findings as well as the tests that
validate our analysis We conclude with section 5
2 The role of clientelism in Spain heterogeneous effects of partisan alignment
A large part of the Spanish public opinion presumes that the allocation of public
spending in the country is largely influenced by clientelistic ties between voters and
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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6
politicians Political clientelism is often cited by Spanish newspapers and its persistence in
this country has its strong roots in the well-known caciquismo of Restoration times -during
the late 19th and early 20th century4 Due to socio-economic changes nowadays traditional
clientelism (based on a peasant clientele system) has been replaced by a modern form of
territorial clientelism also known as ldquobroker clientelismrdquo In her study of Spanish clientelism
Blakeley (2001) explains how the Partido Popular (peoplersquos party) has strategically targeted
Galicia for decades while the Partido Socialista Obrero Espantildeol (socialist party) has
traditionally done so in Andalusia The Andalusian case is frequently illustrated through the
agricultural unemployment payment scheme (PER5) while Galician clientelism is especially
in the form of employment to private business closely linked with the Partido Popular6 In her
text Blakeley also notices the wide-spread accusations of clientelism posed to a long-lasting
ruling party in Catalonia Convergegravencia i Unioacute
There are two dimensions that one should take into account when distinguishing
between clientelism and other related concepts such as pork-barreling and rent-seeking the
scope (how narrow the group of beneficiaries is) and the directedness of the exchange 7
Hence clientelism is based on a quid pro quo arrangement between the patron (politician) and
the client (the voter) where they exchange goods for votes this is made ldquonot simply to seek
but rather to directly reward [electoral] supportrdquo All in all ldquoeven a very lsquobroadrsquo policy maybe lsquoclientelisticrsquo while even very narrow targeting may notrdquo So even broad project grants
such as the ones financed through intergovernmental transfers can be used by governments to
tie the hands of their electorate8
4 For a broader description of the transition from traditional clientelism to partisan clientelism in Spain seeCazorla (1994)5
This agrarian subsidy was implemented by the Andalusian regional government ( Junta de Andaluciacutea) In 1996it was renamed to AEPSA and it extended its scope to other autonomous communities although Andalusia stillreceives a large share of it6 Hopkin (2001) and Corzo (2002) also cite the Galician and Andalusian cases as examples of ldquomodernrdquoclientelism in Spain Robles Egea(2003) focuses on political clientelism in Andalusia7 See Carroll and Lyne (2006) for further discussion on this issue8 We quote two examples extracted from Spanish newspapers to illustrate how transfers can be used withclientelistic purposes both refer to clientelism at the upper-local level The first one is a statement made by EnricMorera a deputy in Les Corts Valencianes (the Valencian regional government)
ldquo(hellip) we have three diputaciones with no competencies who only serve to provide jobs for advisors andtrustworthy people who mandate and in addition the public funds they have at their disposal are used as a toolto preform political clientelism and propaganda of those who are in powerrdquo El Periogravedic 17012011
(httpwwwelperiodiccomnoticias102792_morera-psoe-hablan-acabar-autonomias-pero-diputaciones-nidos-deficit-clientelismo-politicohtml)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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7
To present the above ideas in a formal way we present a model borrowing ideas from
Stokes (2005 2007) and Diaz-Cayeros Magaloni and Weingast (2006) We start with a one-
shot game with two actors voters and parties Voters have ideology xi there are two parties 1
(incumbent) or 2 (opposition) who compete to head an upper-tier government (in our study
central regional or upper-local levels) Votersrsquo preferences are as follow
ui= αi times (-12(vi-xi)2) + (1- αi ) times gi(θ micro)
where vi=x1x2 is the citizenrsquos decision to vote for the clientelist party or the
opposition xi represents the voterrsquos ideology whose weight is α ϵ[01] Voters also get utility
from a potential reward gi=0 g(θ micro) depending on whether the clientelist party wins or
not In our study the reward corresponds to intergovernmental transfers As in Diaz-Cayeros
Magaloni and Weingast (2006) failure to support the clientelist party translates into lack of
reward ie punishment through lower funds Furthermore the reward may in turn be
influenced by two factors the political credit (θ) that the grantor can claim when giving the
reward and the partyrsquos ability (micro) to observe the citizenrsquos vote The reward function is
increasing in both factors Stokesrsquo model presumes that ldquoa personrsquos vote is (hellip) perfectly
observable by political partiesrdquo but in a democracy with secret ballot elections like Spain
this is very unlikely to occur However as pointed by Brusco Nazareno and Stokes (2004)
clientelistic strategies can still work under those circumstances This is possible because
ldquoclientelist parties compensate for the inability to observe the vote directly by observing a
range of other actions and behaviors (hellip) that allow party operatives to make good guessesrdquo
In multi-government systems the lower level representatives (the mayors) may be seen as
intermediaries of the upper-level governments and their proximity to citizens makes them
more capable to perceive their constituentsrsquo actions
All in all the timing of the game can be easily summarized in two stages At the
beginning of the first stage t=1 electoral campaigns take place and politicians signal their
The second example refers to a complaint raised by a representative in the diputacioacuten de Castilla-la-ManchaMario Gonzaacutelez Somoano (peoplesrsquo party) to the representative of public works of the diputacioacuten AacutengelMoreno(socialist party) Gonzaacutelez Somoano complains because in his village Gascuentildea there is an emergencysituation as one of the streets is in an extremely bad condition and it needs to be asphalted
ldquoGonzaacutelez Somoano replied that (hellip) they had undertaken asphalt works in neighboring villages of Gascuentildeabut governed by socialist mayors accusing of acting more in lsquotheir villagesrsquo than in others and reminding that allthe roads from Cantalojas (municipality whose mayor is Moreno) had been asphalted the previous yearrdquoGuadaqueacute17072009(httpwwwguadaquecomindexphpoption=com_contentampview=articleampcatid=33Aprovinciaampid=36823Ael-pp-acusa-al-psoe-de-clientelismo-y-rafael-esteban-llama-al-portavoz-
payasoampItemid=54)
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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6
politicians Political clientelism is often cited by Spanish newspapers and its persistence in
this country has its strong roots in the well-known caciquismo of Restoration times -during
the late 19th and early 20th century4 Due to socio-economic changes nowadays traditional
clientelism (based on a peasant clientele system) has been replaced by a modern form of
territorial clientelism also known as ldquobroker clientelismrdquo In her study of Spanish clientelism
Blakeley (2001) explains how the Partido Popular (peoplersquos party) has strategically targeted
Galicia for decades while the Partido Socialista Obrero Espantildeol (socialist party) has
traditionally done so in Andalusia The Andalusian case is frequently illustrated through the
agricultural unemployment payment scheme (PER5) while Galician clientelism is especially
in the form of employment to private business closely linked with the Partido Popular6 In her
text Blakeley also notices the wide-spread accusations of clientelism posed to a long-lasting
ruling party in Catalonia Convergegravencia i Unioacute
There are two dimensions that one should take into account when distinguishing
between clientelism and other related concepts such as pork-barreling and rent-seeking the
scope (how narrow the group of beneficiaries is) and the directedness of the exchange 7
Hence clientelism is based on a quid pro quo arrangement between the patron (politician) and
the client (the voter) where they exchange goods for votes this is made ldquonot simply to seek
but rather to directly reward [electoral] supportrdquo All in all ldquoeven a very lsquobroadrsquo policy maybe lsquoclientelisticrsquo while even very narrow targeting may notrdquo So even broad project grants
such as the ones financed through intergovernmental transfers can be used by governments to
tie the hands of their electorate8
4 For a broader description of the transition from traditional clientelism to partisan clientelism in Spain seeCazorla (1994)5
This agrarian subsidy was implemented by the Andalusian regional government ( Junta de Andaluciacutea) In 1996it was renamed to AEPSA and it extended its scope to other autonomous communities although Andalusia stillreceives a large share of it6 Hopkin (2001) and Corzo (2002) also cite the Galician and Andalusian cases as examples of ldquomodernrdquoclientelism in Spain Robles Egea(2003) focuses on political clientelism in Andalusia7 See Carroll and Lyne (2006) for further discussion on this issue8 We quote two examples extracted from Spanish newspapers to illustrate how transfers can be used withclientelistic purposes both refer to clientelism at the upper-local level The first one is a statement made by EnricMorera a deputy in Les Corts Valencianes (the Valencian regional government)
ldquo(hellip) we have three diputaciones with no competencies who only serve to provide jobs for advisors andtrustworthy people who mandate and in addition the public funds they have at their disposal are used as a toolto preform political clientelism and propaganda of those who are in powerrdquo El Periogravedic 17012011
(httpwwwelperiodiccomnoticias102792_morera-psoe-hablan-acabar-autonomias-pero-diputaciones-nidos-deficit-clientelismo-politicohtml)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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7
To present the above ideas in a formal way we present a model borrowing ideas from
Stokes (2005 2007) and Diaz-Cayeros Magaloni and Weingast (2006) We start with a one-
shot game with two actors voters and parties Voters have ideology xi there are two parties 1
(incumbent) or 2 (opposition) who compete to head an upper-tier government (in our study
central regional or upper-local levels) Votersrsquo preferences are as follow
ui= αi times (-12(vi-xi)2) + (1- αi ) times gi(θ micro)
where vi=x1x2 is the citizenrsquos decision to vote for the clientelist party or the
opposition xi represents the voterrsquos ideology whose weight is α ϵ[01] Voters also get utility
from a potential reward gi=0 g(θ micro) depending on whether the clientelist party wins or
not In our study the reward corresponds to intergovernmental transfers As in Diaz-Cayeros
Magaloni and Weingast (2006) failure to support the clientelist party translates into lack of
reward ie punishment through lower funds Furthermore the reward may in turn be
influenced by two factors the political credit (θ) that the grantor can claim when giving the
reward and the partyrsquos ability (micro) to observe the citizenrsquos vote The reward function is
increasing in both factors Stokesrsquo model presumes that ldquoa personrsquos vote is (hellip) perfectly
observable by political partiesrdquo but in a democracy with secret ballot elections like Spain
this is very unlikely to occur However as pointed by Brusco Nazareno and Stokes (2004)
clientelistic strategies can still work under those circumstances This is possible because
ldquoclientelist parties compensate for the inability to observe the vote directly by observing a
range of other actions and behaviors (hellip) that allow party operatives to make good guessesrdquo
In multi-government systems the lower level representatives (the mayors) may be seen as
intermediaries of the upper-level governments and their proximity to citizens makes them
more capable to perceive their constituentsrsquo actions
All in all the timing of the game can be easily summarized in two stages At the
beginning of the first stage t=1 electoral campaigns take place and politicians signal their
The second example refers to a complaint raised by a representative in the diputacioacuten de Castilla-la-ManchaMario Gonzaacutelez Somoano (peoplesrsquo party) to the representative of public works of the diputacioacuten AacutengelMoreno(socialist party) Gonzaacutelez Somoano complains because in his village Gascuentildea there is an emergencysituation as one of the streets is in an extremely bad condition and it needs to be asphalted
ldquoGonzaacutelez Somoano replied that (hellip) they had undertaken asphalt works in neighboring villages of Gascuentildeabut governed by socialist mayors accusing of acting more in lsquotheir villagesrsquo than in others and reminding that allthe roads from Cantalojas (municipality whose mayor is Moreno) had been asphalted the previous yearrdquoGuadaqueacute17072009(httpwwwguadaquecomindexphpoption=com_contentampview=articleampcatid=33Aprovinciaampid=36823Ael-pp-acusa-al-psoe-de-clientelismo-y-rafael-esteban-llama-al-portavoz-
payasoampItemid=54)
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
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7
To present the above ideas in a formal way we present a model borrowing ideas from
Stokes (2005 2007) and Diaz-Cayeros Magaloni and Weingast (2006) We start with a one-
shot game with two actors voters and parties Voters have ideology xi there are two parties 1
(incumbent) or 2 (opposition) who compete to head an upper-tier government (in our study
central regional or upper-local levels) Votersrsquo preferences are as follow
ui= αi times (-12(vi-xi)2) + (1- αi ) times gi(θ micro)
where vi=x1x2 is the citizenrsquos decision to vote for the clientelist party or the
opposition xi represents the voterrsquos ideology whose weight is α ϵ[01] Voters also get utility
from a potential reward gi=0 g(θ micro) depending on whether the clientelist party wins or
not In our study the reward corresponds to intergovernmental transfers As in Diaz-Cayeros
Magaloni and Weingast (2006) failure to support the clientelist party translates into lack of
reward ie punishment through lower funds Furthermore the reward may in turn be
influenced by two factors the political credit (θ) that the grantor can claim when giving the
reward and the partyrsquos ability (micro) to observe the citizenrsquos vote The reward function is
increasing in both factors Stokesrsquo model presumes that ldquoa personrsquos vote is (hellip) perfectly
observable by political partiesrdquo but in a democracy with secret ballot elections like Spain
this is very unlikely to occur However as pointed by Brusco Nazareno and Stokes (2004)
clientelistic strategies can still work under those circumstances This is possible because
ldquoclientelist parties compensate for the inability to observe the vote directly by observing a
range of other actions and behaviors (hellip) that allow party operatives to make good guessesrdquo
In multi-government systems the lower level representatives (the mayors) may be seen as
intermediaries of the upper-level governments and their proximity to citizens makes them
more capable to perceive their constituentsrsquo actions
All in all the timing of the game can be easily summarized in two stages At the
beginning of the first stage t=1 electoral campaigns take place and politicians signal their
The second example refers to a complaint raised by a representative in the diputacioacuten de Castilla-la-ManchaMario Gonzaacutelez Somoano (peoplesrsquo party) to the representative of public works of the diputacioacuten AacutengelMoreno(socialist party) Gonzaacutelez Somoano complains because in his village Gascuentildea there is an emergencysituation as one of the streets is in an extremely bad condition and it needs to be asphalted
ldquoGonzaacutelez Somoano replied that (hellip) they had undertaken asphalt works in neighboring villages of Gascuentildeabut governed by socialist mayors accusing of acting more in lsquotheir villagesrsquo than in others and reminding that allthe roads from Cantalojas (municipality whose mayor is Moreno) had been asphalted the previous yearrdquoGuadaqueacute17072009(httpwwwguadaquecomindexphpoption=com_contentampview=articleampcatid=33Aprovinciaampid=36823Ael-pp-acusa-al-psoe-de-clientelismo-y-rafael-esteban-llama-al-portavoz-
payasoampItemid=54)
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8
willingness to provide rewards (g) During these campaigns candidates express promises
which often have implicit threats indicating that the only way to ensure they get the public
goodsservices desired is to vote for them and not for the opposition party In order to target
their voters more accurately candidates often promise specific goods such as infrastructures 9
In this same stage voters express to candidates their willingness to vote for them in exchange
for goods and at the end of the period they cast their vote they have two possibilities either
they renege on their promise or they do not At a second stage t=2 parties take action and
implement public policies Similar to Stokesrsquo analyses there are four possible situations with
different payoffs ndashsummarized in the table below- If the voter complies and votes the
clientelist party he wins and gets the votes of its constituents (vgt0) but if the voter reneges
this party does not get the vote (v=0) and the party loses the elections In this case the party
can still decide whether to pay a reward to the voter or not On the contrary if the party wins
it has two possible options either he complies and rewards its voters (ggt0) or it reneges
(g=0)
PARTY
Reward No Reward
V O T E R
Comply αtimes(-12(xi-x1)2) +(1 α)times g(θ micro) v- g(θ micro) αtimes(-12(xi-x1)
2) v
Defect αtimes(-12(xi-x2)2) +(1 α)times g(θ micro) - g(θ micro) αtimes(-12(xi-x2)
2) 0
As explained the amount of the reward (g) is conditional on both θ and micro So we
would be in the situation ldquoComply-No Reward rdquo whenever the system is totally opaque and the
winning party can hardly be monitored (ie micro rarr0) andor the grantor cannot claim any credit
from the reward (θ=0) Moreover note that to overcome commitment problems the above
model needs to be a repeated game in which micro ne0
From the formal description we can derive four hypotheses on how clientelism could
smooth or exacerbate the impact of political alignment on transfers There may be a chance
that the treatment effect of political alignment on transfers is larger in
H1 smaller municipalities In this case monitoring the voters may be easier (we
expect micro to be higher)
9 In Spain local infrastructures (like sports centers swimming pools roads hospitals etc) are largely financedthrough capital transfers from upper-level governments
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1430
14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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9
H2 municipalities aligned at all levels The credit loss is also lower in this situation (θ
is higher)
H3 in poorer municipalities This is due to the fact that for poor people the benefits
extracted from the reward outweight the disutility from voting a party whose ideologyis far from ours (αpoor 983100 αrich) Thus vote buying is easier in this case
H4 municipalities that are more reliant on intergovernmental transfers This
assumption is closely linked with the previous hypothesis In municipalities with a
large debt burden their ldquopatron-dependencyrdquo makes voters value more the reward
they would get from voting the clientelistic party than their own ideology
Besides the above-mentioned hypotheses we are also interested in analyzing two otherfactors which may affect the use of clientelism the political color of the grantor and its
relative ldquofreedomrdquo for distributing public resources
H5 in Spain left-wing grantors are thought to make more use of clientelist tactics
than right-wing parties so they may allocate larger transfers to municipalities
politically aligned with them
H6 compared to a coalition government a majority government may be more able to
divert resources to their aligned municipalities because it enjoys more freedom of
action
All these hypotheses are contrasted in section 42
3 Empirical Analysis
31 Intergovernmental transfers and elections in Spain
Intergovernmental transfers
During the last 25 years Spain has been involved in an increasing process of fiscal
and political decentralization despite being constitutionally defined as a unitary country10 The
10 The Spanish Constitution contains several provisions that promote federalism For instance according toArticle 137 ldquo[t]he State is organized territorially into municipalities provinces and any AutonomousCommunities that may be constituted All these bodies shall enjoy self-government for the management of theirrespective interestsrdquo
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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10
central government (the Cortes Generales) consists of the Congress of Deputies (Congreso de
los Diputados) and the Senate (Senado) At the regional level Spain is composed of
seventeen autonomous communities (AC) and two autonomous cities At the local level 85
(out of over 8000) of municipalities do not have more than 5000 inhabitants which makes it
often convenient to have upper-local administrations in order to take advantage of economies
of scale or to use inter-municipal cooperation as a tool for a better governance This upper-
local level is known as proviacutencia (province) and its government Diputacioacuten There is a total
of fifty provinces spread amongst the ACs but seven of these regions consist only of one
province
Municipalities are the administration which is closer to citizens and in Spain to
provide them with public goods and services their financing comes mainly from own sourcerevenues and specially from intergovernmental transfers11 The formulas used in the
allocation of current revenues reduce the chances of using such funds in a discretionary way
However the distribution of resources for capital spending is subject to less stringent rules
which may give rise to different sorts of tactical behavior on the governmentrsquos side This is
one of the main reasons for focusing our analysis on capital transfers This type of transfers is
meant to finance a large part of earmarked project suggested by municipalities to their upper
tiers depending on their infrastructure needs A large share of the capital grants received bylocal governments come from the regional and upper-local tiers as shown in table 1
Table 1 here
Electoral processes in Spain
In Spain general regional and municipal elections take place as a rule every four
years On the years analyzed local elections were held in 1999 and 2003 regional elections in
most of ACs were as well in 1999 and 2003 while general elections were in 2000 and 2004Electoral districts are equivalent to provinces and representatives in each province are elected
from a closed list presented by each party Although the political scene is highly polarized (by
the two main parties PSOE and PP) in general elections in parliaments we can also find the
presence of several regional parties as well as a limited number of minority parties hence
ensuring plurality Representatives of upper-local governments ( Diputaciones) are elected
11 In 2006 intergovernmental transfers accounted for 13 of current revenues In turn 23 of these transfers werecurrent grants while the remaining were capital grants
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
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Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
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11
indirectly as an outcome of local elections This reduces accountability and may generate
undesired incentives
32 Empirical strategy
Econometric specification
To obtain estimates of the impact of partisan alignment on intergovernmental transfers
we use the regression discontinuity technique reviewed extensively in Lee and Lemieux
(2010) The intuition beneath this strategy is that in the neighborhood of a cutoff point of an
assignment variable there exists a discontinuity (a sharp change) both in the assignment
variable and in average outcomes The lsquoRDrsquo estimates are seen as a LATE (local average
treatment effect) derived from the comparison of very similar individuals whose maindifference is to be in a different side of the cutoff (ie being eligible or non-eligible for
treatment) In terms of internal validity this econometric technique is considered to be the
best of all quasi-experimental methods Another advantage of the RDD is that it requires less-
stringent identification assumptions The main disadvantage of using this technique is the loss
of external validity
In our particular study capital transfers are conditional on treatment status where
lsquotreatmentrsquo implies that the local government is aligned with the upper level (central regional
or upper-local) As shown in equation (1) below there are two potential outcomes for each
municipality depending on its treatment status
where gi represents per capita grants to local governments and Alignment i is a binary variable
to indicate treatment status
The assignment variable that determines the treatment and control groups is the
electoral margin This variable Margini is computed as follows
if the party in government at the upper level is a right-wing party the variable
margin is the difference between the share of votes obtained by right-wing minus left-
wing parties in local elections in municipality i
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
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Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
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Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
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Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
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23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
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Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
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23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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13
elections in 1999 affects the aggregate transfers in 2002 and 2003 while alignment from
local elections in 2003 does so to the aggregate transfers of 2006 and 2007 Information on
intergovernmental grants has been obtained from budgetary data from the Ministry of
Economics and Finance and transfers are used in per capita terms computed with population
data from the National Institute of Statistics (INE)
Alignment assignment variable and controls
To compute alignment between local governments and each upper-tier (central
regional and upper-local) we use electoral data from the Ministry of Territorial Policy and
Public Administration and the Ministry of Interior It is easy to define alignment when there
is only a single-government controlling the upper and lower-tiers In such situation a
government is politically aligned when the parties at the two levels coincide However when
governments are formed by coalitions the definition of alignment has to be broadened We
use the classification of alignment developed in Soleacute-Olleacute and Sorribas-Navarro (2008a) in
which four different types of alignment are distinguished depending on whether the
alignment is between leaders (be it single party leaders or coalition leaders) or between
coalition partners We focus our attention in two out of their four types of alignment type-a
and type-b12 As we limit to these two types we consider a municipality to be aligned if it
meets one of these conditions (a) the same party controls a single-party government at both
layers (b) a party controls a single-party government at one layer and leads a coalition at the
other layer or a party leads a coalition at both layers We have restricted the definition of
alignment to these types for two reasons On the one hand coalition leaders are expected to
attract more funds than coalition partners On the other hand this narrower definition
represents better the idea of partisan alignment as it only takes into account the party in
control of the government In the situation in which municipalities are type-c and type-d
aligned we have two options either we drop these observations (they account for about frac14 ofthe sample) or we consider them to be unaligned Considering them simply as aligned
municipalities would introduce an important error as equation (2) would no longer be valid
The results presented in section 4 are based on a sample where municipalities with type-c and
type-d alignment are disregarded but we also comment the validity of the results when they
are considered to be unaligned
12 Type-c and type-d alignment are the ones that take into account coalition partners when computing alignment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1430
14
In the first mayoral term around 41 of municipalities were aligned with the central
level 58 with the regional level and 60 with the upper-local level while in the second
term the shares were 45 58 and 63 respectively
In section 31 we argued that the assignment variable of this model which indicateswhether a municipality is aligned or unaligned is the electoral margin that upper-tier
governments obtain in municipal elections The validity of this variable is discussed in
further detail in section 5 To construct the Margin variable we use the municipal electoral
outcomes of 1999 and 2003 to compute the difference in vote shares between right and left
wing parties
In order to provide more robust estimates we include three additional control
variables population density debt burden over current revenues and property tax rates The
effect of population density on capital grants may be negative or positive because this type of
grants tend to favor small municipalities (Soleacute-Olleacute and Bosch 2005) but at the same time
they are biased towards more extensive municipalities were urban sprawl generates higher
expenditure needs The property tax rate can also have a positive or negative effect as
explained in Soleacute-Olleacute and Sorribas-Navarro (2008a) Lastly the ratio of debt burden over
current revenues is included as a proxy for fiscal effort
Sample
Out of the approximately 8000 Spanish municipalities in order to have information
on all the above variables for the two terms analyzed we limit our sample to 1828
municipalities for the analysis of regional and central transfers In the case of upper-local
transfers the sample reduces to 1607 municipalities given that we omit the autonomous
regions with only one province All the municipalities of our study have more than 1000
inhabitants due to restrictions on socio-economic data We also had to restrict our sample tothose municipalities for which we had disaggregated data on transfers We end up with a
representative sample of around 70 of Spanish municipalities of over 1000 inhabitants
Table 2 contains descriptive statistics of all the variables
Table 2 here
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15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1630
16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1530
15
4 Results
41 Discontinuity on transfers homogeneous treatment effects
One of the main advantages of the RD technique is that it is very intuitive since it can
easily be conveyed by a picture The first graphics to present are the ones showing the
ldquojumprdquo on the assignment variable To graph a plot of the assignment variable ( Margin)
against the forcing variable ( Alignment ) the sample is divided into a number of bins of equal
size Then we plot the average value of the assignment and forcing variable in each bin and
we fit a polynomial model for a better visual inspection
If the bins are too narrow the estimates are quite imprecise and if they are too wide
estimates may be biased So to choose the right width of the bin we conduct an F-test fornested models comparing the fit of a regression with Krsquo bins with the fit of a regression with
2Krsquo bins The choice of the optimal polynomial is made upon evaluation of the Akaikersquos
information criterion Figures 1 2 and 3 show these plots for regional and upper-local
transfers and the bin width used is the optimal one indicated from the F-test
As explained in section 31 a relatively simple way to estimate equation (4) is to run a
TSLS instrumenting the forcing variable ( Alignment ) with a dummy (d ) of the assignment
variable ( Margin) We present the first stage estimates in table 3 The results (jointly with a
test for weak instruments) prove that a dummy equal to one when Margin is positive is a
strong instrument of the Alignment variable Panel A and C do not contain neither territorial
nor time effects while Panel B and D do so Panel C and D contain control variables (debt
burden property tax rate and population density) Figures in bold correspond to the estimates
of the optimal polynomial
Table 3 here
Both the graphs and the figures on table 3 confirm the existence of a sharp change on
the assignment variable at the threshold To demonstrate whether the same occurs with the
outcome variable (per capita grants) we plot the assignment variable against the outcome
variable following the same procedure than before Not observing a graphical ldquojumprdquo on
transfers rules out any possibility of having a significant treatment effect of alignment
Figures 4 5 and 6 show the causal relationship between alignment and transfers at central
regional and upper-local levels From these three pictures we would expect the treatment
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1630
16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
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28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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16
effect of alignment on transfers to be the highest in the case of regional transfers while the
impact is clearly reduced for central and upper-local transfers
RD estimates are shown in tables 4 and 513 Table 4 presents the reduced form (ie
intention to treat) estimates while table 5 shows IV estimates The table is structured in fourpanels (A B C and D) which have the same structure than the ones in table 3 The choice of
the optimal polynomial is based on the AIC values in the case of the reduced form and on
an F-test for joint significance of the polynomial in the case of the IV regression
Table 4 and 5 here
The results on table 4 and 5 confirm the ideas extracted from the previous
graphs the amount of per capita grants received by municipalities is statistically larger foraligned municipalities (relative to unaligned ones) In turn the estimates show that the
impact of political alignment is greater in the case of regional transfers This is consistent
with the findings of Soleacute-Olleacute and Sorribas-Navarro (2008a) who show that ldquoa municipality
aligned with Central Regional and Upper-local grantors will receive additional grants of 51
12 and 57 euros per capita respectivelyrdquo
As previously noted the sample from which we extract the results in tables 4 and 5
disregards those municipalities with alignment type-c and type-d In addition we have
obtained the RD estimates from a sample where these municipalities are considered
unaligned and we find that the significance and sign of the coefficients remain unaltered 14
42 Discontinuity on transfers heterogeneous treatment effects
In section 2 we have argued why we believe clientelism could be an important source
of heterogeneity for the treatment effect of partisan alignment on transfers To test this idea
we focus on six different dimensions the size of the municipality the alignment at all levelsof government the poverty level the reliance on intergovernmental transfers the political
color of the grantor and the ldquomajorityrdquo status of the grantor government In the first case we
use population data to split the observations into two subsamples municipalities below and
13 We have performed the same analysis using as a dependent variable the logarithm of capital transfers percapita Although we do not show the results for the sake of brevity we can confirm the overall result holdpartisan alignment has a positive and significant impact on the distribution of central regional and upper-local
transfers14 Results are available upon request
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
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18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
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19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1730
17
over 5000 inhabitants15 and then we use a Wald test to establish whether the differences are
statistically significant In the second case we follow a similar procedure but we separate the
sample into municipalities that are aligned at all levels of government and municipalities who
are not That is the control group in both subsamples is the same (unaligned municipalities)
but the treatment group in the first subsample contains only municipalities aligned with all the
upper tiers (central regional and upper-local)
To study the third dimension of interest we use unemployment rates as a proxy for
poverty levels we separate the sample into municipalities with unemployment rates over and
below the average at time t of the region (province or AC) they belong to To test the fourth
hypothesis we use the average debt burden of the municipalities of our study to divide the
sample into those who are indebted over or below the average Finally to study the impact ofthe political color of the grantor the sample is split into municipalities with a left-wing grantor
and municipalities with a right-wing grantor while to study the hypothesis of the ldquomajority
statusrdquo effect we divide the sample into majority and coalition grantors
The results of our empirical analysis are in table 6 where we present the reduced form
estimates of each subsample taken into account the six dimensions we have discussed The
regressions in Panel 1 -where the dependent variable is central transfers per capita- show that
the casual effect of alignment on transfers is homogeneous amongst municipalities and that
clientelism does not have a significant impact In the case of regional transfers (Panel 2 in
table 6) we do find empirical evidence that for smaller municipalities the impact of partisan
alignment on grants is larger than for bigger municipalities and this impact is also larger when
the grantor is left-wing (compared to a right-wing grantor) Finally Panel 3 presents the
results for upper-local transfers where we also observe that being a small municipality
compared to being a big one translates into a larger treatment effect of alignment on transfers
43 Validity tests
There are two main concerns that may question the validity of our results The first
one is the possibility of manipulation of the forcing variable ( Margin) If this was the case it
would mean that political parties can influence in some way the electoral results in close
15 We could split the sample into municipalities with population above or below the mean but for the Spanishcase this separation is less relevant given that a large share of municipalities are small municipalities and wewould end up with two subsamples where one of them is not representative We have chosen the 5000inhabitants threshold because this figure is also used to allocate competencies to municipalities so city councilsabove or below this threshold may have similar competencies to fulfill
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1830
18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1930
19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1830
18
races In this situation we would observe an abnormal concentration of observations near the
threshold In Figure 7 we present the histogram of the assignment variable to show that this is
not the case and that the results of elections in close races in Spain cannot be precisely
controlled by agents that is they are ldquoas good as randomizedrdquo
The second concern that may affect the validity of the results is the possibility that
other covariates experience a sharp change (a discontinuity) at the cutoff To rule out this
option we estimate the 2SLS coefficients of equation (4) but we switch the dependent variable
to different covariates population density (columns 1 and 4 in table 6) unemployment rates
(columns 2 and 5 in table 6) and debt burden (columns 3 and 6 in table 6) The figures in table
6 show that in any case there exists a discontinuity for these covariates
5 Conclusions
In a system of multi-level governments the normative rationale beneath the
distribution of intergovernmental transfers may be offset by the effects of partisan ties
between grantor and recipient This has been claimed in several analyses in the political
economy field and in this paper we have presented empirical evidence of the existence of this
phenomenon in Spain Our results are obtained from applying a regression discontinuity
design in a database of around 2000 Spanish municipalities over two mayoral terms 2000-
2003 and 2004-2007 The use of this econometric technique allows us to obtain more robust
estimates than those in previous studies Furthermore we believe we improve upon existing
literature by linking partisan ties with clientelism a salient issue in Spain Adding this factor
in our analysis makes it possible to study a possible heterogeneous effect of partisan
alignment on grants
The findings presented in this paper have shown that aligned municipalities which had
close electoral races do indeed receive larger transfers (in the last two years of the electoral
term) than unaligned municipalities This discontinuity in the amount of transfers is
especially sharp in the case of regional transfers compared to central and upper-local grants
This confirms the findings of previous studies but in addition we believe we are able to
isolate better the effect of partisan ties per ser Lastly we also find evidence that the
discontinuity in grants is larger for smaller municipalities (in the case of regional and upper-
local grants) and for municipalities with a left-wing grantor at the regional level
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1930
19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 1930
19
References
Albouy David 2009 ldquoPartisan Representation in Congress and the Geographic
Distribution of Federal Fundsrdquo National Bureau of Economic Research Working Paper
15224
Ansolabehere S A Gerber and J Snyder 2002 ldquoEqual votes equal money court-
ordered redistricting and public expenditures in the American statesrdquo American Political
Science Review 96 767-777
Arulampalam W Dasgupta S Dhillon A and Dutta B 2009 ldquoElectoral Goals and
Center-state Transfers A Theoretical Model and Empirical Evidence from Indiardquo Journal of
Development Economics 88 pp 103ndash119
Blakeley G (2001) Clientelism in the building of state and civil society in Spain In
Piattoni Simona ed Clientelism interests and democratic representation the European
experience in historical and comparative perspective Cambridge Studies in Comparative
Politics Cambridge UK Cambridge University Press
Brollo F and Nannicini T 2010 ldquoTying Your Enemyrsquos Hands in Close Races The
Politics of Federal Transfers in Brazilrdquo IGIER Working Paper
Brusco V Nazareno M and Stokes S 2004 Selective Incentives and Electoral
Mobilization Evidence from Argentina Chicago Center on Democracy Working Paper 26
Besley T and Burgess R 2002 ldquoThe Political Economy of Government
Responsiveness Theory and Evidence from Indiardquo Quarterly Journal of Economics 117(4)
1415-1452
Case A 2001 ldquoElection goals and income redistribution recent evidence fromAlbaniardquo European Economic Review 45 405ndash423
Cazorla J 1994 ldquoDel clientelismo tradicional al clientelismo de partido evolucioacuten y
caracteriacutesticasrdquo Barcelona ICPS Working paper 86
Carroll R A and Lyne M M 2006 Rent-seeking Pork-barreling and Clientelism
Integrating the Study of Political Market Failure Paper presented at the annual meeting of
the American Political Science Association
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2030
20
Corzo Fernaacutendez S (2002) ldquoEl clientelismo poliacutetico como intercambiordquo WP 206
Institut de Ciegravencies Poliacutetiques i Socials
Cox G McCubbins M 1986 ldquoElectoral politics as a redistributive gamerdquo The
Journal of Politics 48 370ndash389
Diaz-Cayeros A Magaloni B and Weingast B 2006 ldquoTragic Brilliance
Equilibrium Party Hegemony in MexicordquoWorking Paper Hoover Institution
Robles Egea A 2003 ldquoEl clientelismo poliacutetico y la democracia en Andaluciacuteardquo in
Anuario de derecho parlamentario
Ferreira F and Gyourko J 2009 ldquoDo Political Parties Matter Evidence from US
Citiesrdquo Quarterly Journal of Economics 124(1) 399ndash422
Grossman P 1994 ldquoA political theory of intergovernmental grantsrdquo Public Choice
78 295ndash303
Hopkin J (2001) ldquoA lsquoSouthern model of electoral mobilisation Clientelism and
electoral politics in post-Franco Spainrdquo [online] London LSE Research Online
Johansson E 2003 ldquoIntergovernmental grants as a tactical instrument empirical
evidence from Swedish municipalitiesrdquo Journal of Public Economics 87 883-915
Khemani S 2003 ldquoPartisan Politics and Intergovernmental Transfers in India
Working Paper vol 3016 Development Research Group The World Bank
Lee David S 2008 ldquoRandomized Experiments from Non-random Selection in US
House Electionsrdquo Journal of Econometrics 142(2) 675ndash97
Levitt S Snyder J 1995 ldquoPolitical parties and the distribution of federal outlaysrdquoAmerican Journal of Political Science 39 958ndash980
Lindbeck A Weibull J 1987 Balanced budget redistribution as the outcome of
political competition Public Choice 52 273ndash297
Migueis M 2009 ldquoThe Effect of Political Alignment on Transfers to Portuguese
Municipalitiesrdquo Working Paper
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2130
21
Musgrave R 1959 The Theory of Public Finance A Study in Public Economics New
York McGraw Hill
Musgrave R 1983 ldquoWho should tax where and whatrdquo In C McLure Jr ed Tax
Assignment in Federal Countries Centre for Research on Federal Financial RelationsCanberra Australian National University
Oates W 1972 Fiscal Federalism New York Harcourt-Brace-Jovanovich
Porto A and P Sanguinetti 2003 ldquoPolitical determinants of intergovernmental
grants evidence from Argentinardquo Economics and Politics 13 237-56
Schady N 2000 ldquoThe political economy of expenditures by the Peruvian Social Fund
(FONCODES) 1991-1995rdquo American Political Science Review 94 289-304
Stokes S 2005 ldquoPerverse Accountability A Formal Model of Machine Politics with
evidence from Argentinardquo American Political Science Review 99(3)315-325
Soleacute-Olleacute A Bosch N 2005 ldquoOn the relationship between authority size and the
cost of providing local services lessons for the design of intergovernmental transfers in
Spainrdquo Public Finance Review 33 343ndash384
Soleacute-Olleacute A and Sorribas-Navarro P 2008a ldquoThe effects of partisan alignment on
theallocation of intergovernmental transfers Differences-in-differences estimates for
Spainrdquo Journal of Public Economics 92 (12) 2302-2319
Soleacute-Olleacute A and Sorribas-Navarro P 2008b ldquoDoes partisan alignment affect the
electoral reward of intergovernmental transfersrdquo CESIFO Working Paper no2335
Stroumlmberg D 2001 ldquoRadios impact on public spendingrdquo Institute for International
Economic Studies Stockholm University mimeo wwwiiessuse~stromberRadiopdf
Pettersson-Lidbom Per 2008 ldquoDo Parties Matter for Economic Outcomes A
Regression-Discontinuity Approachrdquo Journal of the European Economic Association 6(5)
1037ndash56
Weingast B K Shepsle and C Johnsen 1981 ldquoThe political economy of benefits
and costs a neoclassical approach to distributive politicsrdquo Journal of Political Economy 89
642-64
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2230
22
Worthington A Dollery B 1998 ldquoThe political determination of intergovernmental
grants in Australiardquo Public Choice 94 299ndash315
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2330
23
Table 1 Capital transfers to Spanish municipalities (2002-2007)
Transfers to local governments 2002 2003 2004 2005 2006 2007
From State 13 14 11 10 10 11From Autonomous Communities (AC) 46 47 48 49 52 55From Diputaciones (Upper-local) 20 20 19 19 18 18
Source Ministry of Economics and Finance
Table 2 Descriptive statistics and data sources
Variable Description Mean
(SD) Source
Central grants
Per capita capital grants assigned fromcentral government (item 72 of the revenuebudget)
3305(7826)
Ministry of Economics andFinance
Regional grants
Per capita capital grants assigned fromregional government (item 75 of therevenue budget)
15994(19654)
Upper-local grants
Per capita capital grants assigned fromupper- local government (item 761 of therevenue budget)
7607(9482)
Debt burden
Debt service (capital item 9 of the spendingbudget +interest item 3) as a share ofcurrent revenues
0062(008)
Margin
Vote share of right-wing parties if upper-tieris right-wing vote share of left-wing parties
if upper-tier is left-wing 0 otherwise
009(035)
Ministry of TerritorialPolicy and Public
Administration andMinistry of Interior
Population density Population Km2 41476(138892)
National Institute ofStatistics (INE)
Property tax rate Nominal property tax rate (IBI) 059(016)
Cadastre (Catastro)
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
0
2
4
6
8
1
A l i g n m e n
t C e n
t r a l - L o
c a
l
-5 0 5
Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
28
Figure 2
Figure 3
0
2
4
6
8
1
A l i g n m e n
t R e g
i o n a
l - L o c a
l
-5 0 5Electoral margin
Note bin window=5 percent
0
2
4
6
8
1
A l i g n
m e n t U p p e r L o c a l - L o c a l
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
29
Figure 4
Figure 5
0
2 0
4 0
6 0
8 0
C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
5 0
1
0 0
1 5 0
2 0 0
R e g
i o n a
l t r a n s
f e r s
-5 0 5Electoral margin
Note bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
30
Figure 6
Figure 7
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2430
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
25
Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
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Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
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Figure 2
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
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Figure 4
Figure 5
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
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Figure 6
Figure 7
4 0
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U p p e r - l o c a l t r a n s f e r s
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F r e q u e n c y
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Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2530
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Table 4 Electoral margin and intergovernmental transfers (reduced form)
(1) (2) (3) (4) (5) (8) (9) (10) (11) (12)Polynomiald
0 1 2 3 4 0 1 2 3 4
Panel A Panel B
Central
d(C) 6630 3882 4683 1284 1283 3974 7030 7427 1140 1145
(2125) (3591) (3585) (4392) (4402) (2070) (3379) (3371) (4108) (4129) Regional
d(R) 6034 4755 6160 5112 4968 5780 4876 5717 4845 4799(6318) (1067) (1107) (1311) (1335) (6234) (9986) (1028) (1251) (1270)
Upper-local
d(UL) 1280 6434 1721 1565 1923 2051 1139 1923 1779 1795(3561) (5584) (5793) (6635) (6847) (3744) (5189) (5305) (6172) (6341)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls No No No No No No No No No NoPanel C Panel D
Central
d(C) 6665 4369 8510 1084 1067 4653 6964 8679 1046 1014(2177) (3748) (3666) (4581) (4585) (2159) (3494) (3473) (4263) (4257)
Regional
d(R) 5831 4433 5724 5220 5195 5441 4745 5591 5273 5302(6018) (1025) (1040) (1275) (1284) (5896) (9826) (9965) (1233) (1240)
Upper-local
d(UL) 1120 4322 1472 1299 1661 2026 1164 1818 1664 1721(3546) (5540) (5709) (6605) (6787) (3656) (5080) (5211) (6076) (6251)
Territoriald
No No No No No Yes Yes Yes Yes Yes
Controls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports reduced form estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) D() is an indicator for electoral margin below the eligibility threshold (5) no interactionsof the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with no controls) and3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (with controlvariables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
Table 5 Intergovernmental transfers and partisan alignment (2SLS estimates)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Polynomial d 0 1 2 3 4 0 1 2 3 4
Panel A Panel BCentral
Alignment(C) 8831 5929 7157 2334 2336 5383 1081 1142 2111 2122(2829) (5480) (5475) (8028) (8069) (2795) (5188) (5177) (7644) (7697)
Regional
Alignment (R) 7843 6996 9687 9329 9216 7472 7440 9102 9137 9106(8212) (1561) (1727) (2376) (2462) (7990) (1504) (1610) (2324) (2376)
Upper-local
Alignment
(UL)
1671 9933 2825 2926 3663 2627 1838 3206 3452 3519
(4650) (8611) (9554) (1241) (1308) (4794) (8352) (8865) (1200) (1248)Territorial d No No No No No Yes Yes Yes Yes YesControls No No No No No No No No No No
Panel C Panel D
Central
Alignment (C) 8705 6424 1257 1915 1877 6119 1044 1304 1888 1822(2840) (5506) (5416) (8112) (8091) (2829) (5229) (5214) (7718) (7667)
Regional
Alignment (R) 7590 6533 9043 9626 9738 7011 7317 8986 1006 1018(7799) (1495) (1622) (2322) (2376) (7539) (1489) (1574) (2311) (2340)
Upper-local
Alignment
(UL)
1461 6660 2411 2420 3374 2597 1880 3026 3223 3371
(4619) (8520) (9359) (1227) (1600) (4677) (8169) (8675) (1175) (1226)Territorial d No No No No No Yes Yes Yes Yes YesControls Yes Yes Yes Yes Yes Yes Yes Yes Yes YesNote (1)The table reports 2SLS estimates of the effect of partisan alignment on intergovernmental transfers) (2) robust standard errors in parentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 if the municipality is aligned with the upper tier (5)no interactions of the polynomials with the eligibility indicator (6) regressions for central and regional transfers are on a sample of 3657 observations (with nocontrols) and 3477 (with control variables) while regressions for upper-local transfers are on a sample of 3215 observations (with no controls) and 3208 (withcontrol variables) (7) panel A and C do not contain neither time nor territorial effects while panel B and D contain both
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
27
Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
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Figure 2
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Figure 4
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
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Figure 6
Figure 7
4 0
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U p p e r - l o c a l t r a n s f e r s
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Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2630
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
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Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
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A l i g n m e n
t C e n
t r a l - L o
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Electoral marginNote bin window=5 percent
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
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Figure 2
Figure 3
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
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Figure 4
Figure 5
0
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C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
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Figure 6
Figure 7
4 0
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8 0
1 0 0
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1 4 0
U p p e r - l o c a l t r a n s f e r s
-5 0 5Electoral margin
Note bin window=5 percent
0
5
1
1 5
F r e q u e n c y
-1 -5 0 5 1Margin Central govt party
0
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F r e q u e n c y
-1 -5 0 5 1Margin State govt party
0
5
1
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F r e q u e n c y
-1 -5 0 5 1Margin Upper-local govt party
Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2730
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Table 7 Discontinuity in other covariates (2SLS estimates)
(1) (2) (3) (5) (6) (7)
Panel A Panel BCentral
Alignment(C) -2312 -935e-05 000101 -1636 -0000987 -000135(1589) (000187) (000975) (1622) (000172) (000976)
Regional
Alignment (R) -1876 -000391 -000395 -1873 -000257 0000523(1746) (000084) (000900) (1745) (000164) (000883)
Upper-local
Alignment (UL) -4324 -000569 -00120 -2298 -000204 -000907(1162) (000017) (00104) (2019) (000170) (00104)
Territorial d No No No Yes Yes YesControls No No No No No NoNote (1)The table reports 2SLS estimates of the effect of partisan alignment on several covariates (2) robust standard errors inparentheses plt001 plt005 plt01 (3) SE clustered by municipality (4) Alignment() is a binary variable equal to 1 ifthe municipality is aligned with the upper tier (5) no interactions of the polynomials with the eligibility indicator (6) dependentvariable for columns 1 and 5 population density for columns 2 and 6 unemployment level for columns 3 and 7 debt burden forcolumns 4 and 8 level of studies
Figure 1
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
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Figure 2
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
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Figure 4
Figure 5
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C e n t r a l t r a n s f e r s
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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Figure 6
Figure 7
4 0
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U p p e r - l o c a l t r a n s f e r s
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Note bin window=5 percent
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F r e q u e n c y
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Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2830
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Figure 2
Figure 3
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
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Figure 4
Figure 5
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C e n t r a l t r a n s f e r s
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
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Figure 6
Figure 7
4 0
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U p p e r - l o c a l t r a n s f e r s
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Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 2930
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Figure 4
Figure 5
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C e n t r a l t r a n s f e r s
-5 0 5Electoral margin
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8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
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Figure 6
Figure 7
4 0
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U p p e r - l o c a l t r a n s f e r s
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F r e q u e n c y
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Note bin=5 percent
Figure Histograms of the margin
8122019 (2011) Partisan alignment clientelism and intergovernmental transfers - evidence from Spanish municipalitiespdf
httpslidepdfcomreaderfull2011-partisan-alignment-clientelism-and-intergovernmental-transfers-evidence 3030
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Figure 6
Figure 7
4 0
6 0
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U p p e r - l o c a l t r a n s f e r s
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Note bin window=5 percent
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F r e q u e n c y
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F r e q u e n c y
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Note bin=5 percent
Figure Histograms of the margin