The Impact of Municipal Mergers on Local Public Spending: Evidence from Remote-Sensing Data

47 Pages Posted: 11 Jun 2016

See all articles by Steve Pickering

Steve Pickering

University of Essex

Seiki Tanaka

University of Leeds

Kyohei Yamada

International University of Japan

Date Written: June 8, 2016

Abstract

What happens to public spending after political units change? Within democratic states, the expansion of political units and corresponding demographic shifts should lead strategic politicians to alter how they allocate public resources in order to maximize their electoral pay-off. We argue that when rural and sparsely populated municipalities merge with more urban and densely populated municipalities, residents of the former are likely to see a reduced share of public spending. We take advantage of municipality mergers in Japan to systematically study what politicians do when their districts - and constituencies - suddenly change. To test the argument, we detect changes in public spending before and after the municipal mergers with remote sensing data, which allows for flexible units of analysis and enables us to proxy for spending within municipalities. Our results show that politicians reduce benefits allocated to areas where there are a small number of people, while increasing the allocation to more populous areas.

JEL Classification: D72, D78, H41, H72, N45

Suggested Citation

Pickering, Steve and Tanaka, Seiki and Yamada, Kyohei, The Impact of Municipal Mergers on Local Public Spending: Evidence from Remote-Sensing Data (June 8, 2016). Available at SSRN: https://ssrn.com/abstract=2792140 or http://dx.doi.org/10.2139/ssrn.2792140

Steve Pickering

University of Essex ( email )

Seiki Tanaka (Contact Author)

University of Leeds ( email )

School of Politics and International Studies
Leeds, LS2 9JT
United Kingdom

Kyohei Yamada

International University of Japan ( email )

Kokusaicho 777
Minamiuonuma, Niigata 949-7277
Japan

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