Decentralizing Development: Evidence from Government Splits

83 Pages Posted: 30 Jan 2024

See all articles by Ricardo Dahis

Ricardo Dahis

Monash University

Christiane Szerman

London School of Economics

Multiple version iconThere are 2 versions of this paper

Abstract

Changes in political boundaries aimed at devolving power to local governments are common in many countries. We examine the economic consequences of redistricting through the creation of smaller government units. Exploiting reforms that led to sharp variations in the number of government units in Brazil, we show that voluntary redistricting increases the size of the public sector, public services delivery, and economic activity in new local governments over the long term. The gains in economic activity are not offset by losses elsewhere and are stronger in peripheral and remote backward areas neglected by their parent governments. We provide evidence that decentralizing decision-making power boosts local development in disadvantaged areas beyond simply gains in fiscal revenues.

Keywords: local development, decentralization, public goods

JEL Classification: H11, H41, H75, O43

Suggested Citation

Dahis, Ricardo and Szerman, Christiane, Decentralizing Development: Evidence from Government Splits. IZA Discussion Paper No. 16761, Available at SSRN: https://ssrn.com/abstract=4709694 or http://dx.doi.org/10.2139/ssrn.4709694

Ricardo Dahis (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, 3800
Australia

Christiane Szerman

London School of Economics

Economics Department
32 Lincoln's Inn Fields
London, London WC2A 3PH
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
14
Abstract Views
111
PlumX Metrics