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Local Electoral Incentives and Decentralized Program Performance


Presenter: Frederico Finan joined the department of economics at UC-Berkeley in 2009 as an assistant professor. He received his PhD in Agriculture and Resource Economics from UC-Berkeley in 2006.  Prior to joining the department, Professor Finan was an assistant professor of economics at UCLA.  His research and recent publications have focused on labor markets, program evaluation, and political economy.   
                                                       
Chair:  Emmanuel Skoufias, Lead Economist, PRMPR

When: Thursday, December 3, 2009,  12:30 - 2:00 pm
 
Abstract:  Central governments are increasingly delegating to local governments the implementation of social programs in hopes of improving their performance. Yet, for decentralized program implementation to be effective, locally elected officials must have an incentive to achieve high levels of performance. This paper analyzes how electoral incentives affect the performance of a major decentralized conditional cash transfer program intended on reducing school dropout rates among children of poor households in Brazil. We show that while this federal program successfully reduced school dropout by 8 percentage points, the program’s impact was 36 percent larger in municipalities governed by mayors who faced re-election possibilities compared to those with lame-duck mayors. First term mayors with good program performance were much more likely to get re-elected. These mayors adopted program implementation practices that were not only more transparent but also associated with better program outcomes. Overall, our findings underscore the importance of electoral incentives for the decentralization of public goods provision.

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