Does enfranchisement affect fiscal policy? Theory and empirical evidence on Brazil
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This paper studies the effect of political participation on public spending at the local level in Brazil. In particular, we look at the phased-in implementation of electronic voting in the late 1990s—which enfranchised poorer voters by decreasing the number of invalid votes—to identify the causal effect of political participation on public spending. We build a theoretical political economy model which allows voters to cast, not purposefully, an invalid vote, and show that when poorer voters’ likelihood of casting a valid vote increases, public social spending increases as well. We test this prediction empirically using a difference-in-differences model where municipalities using electronic voting constitute our treatment group. We find that an increase of 1 percentage point in the valid vote to turnout ratio for state representatives increases health spending by 1.8%; education by 1.4%; public employment by 1.25%; intergovernmental transfers by 1%; and local taxes by 2.6%.
KeywordsElectronic voting Political participation Social public spending Difference-in-differences
JEL ClassificationH21 H4 H5 H7
We are very grateful to the co-editor, Marko Koethenbuerger, and the anonymous referee for their insightful comments and suggestions. We also thank Rebecca Thornton, Daniel Bernhardt, Daniel McMillen, Jake Bowers, José Cheibub for their detailed feedback and support. This paper also benefited from comments by participants at the 9th Midwest Graduate Student Summit in Applied Economics, Regional and Urban Studies; the 2016 Midwest International Economic Development Conference; the 2016 LACEA-LAMES Annual Meeting; the 2017 North American Summer Meeting of the Econometric Society; the 2017 European Meeting of the Econometric Society; the 45th ANPEC Annual Conference and the UIUC graduate seminars. All errors are our own.
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