Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/130316 
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers No. 9623
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
It is widely believed that politicians allocate public resources in ways to maximize political gains. But what is less clear is whether this comes at a cost to welfare; and if so, whether alternative electoral rules can help reduce these costs. In this paper, we address both of these questions by modeling and estimating politicians' decisions to allocate public funds. We use data from Brazil's federal legislature, which grants each federal legislator a budget to fund public projects in his state. We find that 26 percent of the public funds are distorted relative to a social planner's allocation. We then use the model to simulate several potential policies reforms to the electoral system, including adopting approval voting and implementing term limits. We find that an approval voting system reduces the distortions by 7.5 percent. Term limits also reduce distortions, but come at the cost of more corruption, which makes it a welfare-reducing policy.
Subjects: 
distributive politics
public goods
corruption
electoral rules
term limits
JEL: 
H40
Document Type: 
Working Paper

Files in This Item:
File
Size
1.83 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.