Electoral Goals and Center-State Transfers: A Theoretical Model and Empirical Evidence from India

37 Pages Posted: 23 May 2008

See all articles by Wiji Arulampalam

Wiji Arulampalam

University of Warwick - Department of Economics; IZA Institute of Labor Economics

Sugato Dasgupta

Independent

Amrita Dhillon

University of Warwick - Department of Economics

Bhaskar Dutta

University of Warwick - Department of Economics

Abstract

We construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations. These considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not. A testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers. We test this prediction using Indian data for 14 states from 1974-75 to 1996-97. We find that a state which is both aligned and swing in the last state election is estimated to receive 16% higher transfers than a state which is unaligned and non-swing.

Keywords: redistributive politics, alignment, swing, electoral competition

JEL Classification: C72, D72

Suggested Citation

Arulampalam, Wiji and Dasgupta, Sugato and Dhillon, Amrita and Dutta, Bhaskar, Electoral Goals and Center-State Transfers: A Theoretical Model and Empirical Evidence from India. , Vol. , pp. -, . Available at SSRN: https://ssrn.com/abstract=1136161 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Wiji Arulampalam (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
01203 523471 (Phone)
01203 523032 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Sugato Dasgupta

Independent ( email )

No Address Available
United States

Amrita Dhillon

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
+44 1 20 352 3032 (Phone)

Bhaskar Dutta

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
44 24 7652 3478 (Phone)
44 24 7652 3032 (Fax)

HOME PAGE: http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/dutta/

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