Regional transfers
Subject
Economics
Publishing details
NBER Working Paper
Authors / Editors
Corbi R; Papaioannou E; Surico P
Biographies
Publication Year
2017
Abstract
We exploit a series of discontinuities, at several population thresholds, in the allocation mechanism of federal transfers to municipal governments in Brazil to identify the causal effect of municipal spending on local labor markets, using a ‘fuzzy’ regression discontinuity design. Our estimates imply a cost per job of about 8; 000 US dollars per year, mostly driven by employment in services, and a local income multiplier of around two. A currency union model with nominal rigidities and liquidity constraints implies that the stimulative effects would have been substantially smaller if local government spending was financed by local tax revenues rather than regional transfers.
Publication Notes
This paper supersedes NBER WP No. 20751 "Federal Transfer Multipliers: Quasi-Experimental Evidence from Brazil".
Series
NBER Working Paper