Public Choice

, Volume 171, Issue 1–2, pp 223–241 | Cite as

Granting votes: exposing the political bias of intergovernmental grants using the within-between specification for panel data

Article

Abstract

Instead of alleviating fiscal inequalities, intergovernmental grants are often used to fulfill the grantors’ political goals. This study uses a unique panel dataset on more than 500 Croatian municipalities over a 12-year period to uncover the extent to which grant distribution is biased owing to grantors’ electoral concerns. Instead of the default fixed effects approach to modelling panel data, we apply a novel within-between specification aimed at uncovering the contextual source of variation, focusing on the effects of electoral concerns on grant allocation within and between municipalities. We find evidence of a substantial political bias in grant allocations both within and between municipalities, particularly when it comes to local-level electoral concerns. The paper offers researchers a new perspective when tackling the issue of politically biased grant allocation using panel data, particularly when they wish to uncover the simultaneous impact of time-variant and time-invariant factors, or when they cannot apply a quasi-experimental approach because of specific institutional contexts.

Keywords

Intergovernmental grants Political bias Within-between specification Vote-buying 

JEL Classification

D72 H77 C23 

Supplementary material

11127_2017_435_MOESM1_ESM.docx (35 kb)
Supplementary material 1 (DOCX 35 kb)

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Institute of Political ScienceUniversity of LuxembourgEsch-sur-AlzetteLuxembourg
  2. 2.Department of Politics and International RelationsUniversity of OxfordOxfordUK

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