Local Funds and Political Competition: Evidence from the National Rural Employment Guarantee Scheme in India
This paper examines how local politics affects public fund allocations. It uses the context of the National Rural Employment Guarantee Scheme (NREGS) in India which was introduced by the Indian National Congress (INC). Using longitudinal data on funds sanctioned and election results from three rounds of elections in Rajasthan, a state in India, we find an inverted U-shaped relationship between existing vote share of INC and subsequent fund allocations at the block level. To address the issue of endogeneity, we instrument vote shares by their lagged values. The results using only close elections are however distinct as higher funds are allocated to blocks where the INC has lower vote share. We give evidence of a mechanism which highlights the role of a political representative in the funds sanctioning process. Further, we show that the strategy by INC was beneficial in gaining vote share.
Year of publication: |
2014-05
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Authors: | Gupta, Bhanu ; Mukhopadhyay, Abhiroop |
Institutions: | Institute for the Study of Labor (IZA) |
Subject: | political economy | local elections | National Rural Employment Guarantee Scheme |
Saved in:
freely available
Extent: | application/pdf |
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Series: | |
Type of publication: | Book / Working Paper |
Notes: | Number 8196 33 pages |
Classification: | D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legistures, and Voting Behavior ; J08 - Labor Economics Policies ; H53 - Government Expenditures and Welfare Programs ; H75 - State and Local Government: Health, Education, and Welfare |
Source: |
Persistent link: https://www.econbiz.de/10010775110