Do Fiscal Transfers Affect Local Democracy? Lessons from Chilean Municipalities

Bibliographic Data

ID3036552
AuthorsCarla Alberti (0000-0002-0679-4716, Pontificia Universidad Católica de Chile), Diego Diaz-Rioseco (0000-0003-3045-3759, Pontificia Universidad Católica de Chile), Ignacio Riveros (0000-0002-5358-544X, University of Southern California)
Year2023
Volume65
Issue4
Pages50-75
Publication date2023-11-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueLatin American Politics and Society (JOURNAL)
Journal identifiersISSN: 1531-426X • E-ISSN: 1548-2456
PublisherCambridge University Press (CUP) (PUBLISHER)
DOI10.1017/lap.2023.16
OpenAlexW4379512562
LanguageEN
Citations received1
References cited33

Extant literature concurs that fiscal transfers affect local democracy when they grant subnational governments nontax revenue. Yet there is nonetheless a mismatch between this concept and existing measures, which consider the whole transfers local governments receive, including both tax and nontax revenue. This article studies the Fondo Común Municipal (FCM), the most important intergovernmental grant in Chile, and provides a novel measure of nontax revenue. It uses this measure alongside the whole FCM transfer to test the rentier hypothesis. On the one hand, it shows that both measures increase the incumbent party vote share, although the effect of our measure is smaller. On the other hand, it finds that the FCM transfer has an impact on the probability of reelection and the competitiveness of elections, but this effect disappears when using our measure. Overall, the findings suggest that rents from transfers do not lead to strong electoral dominance in unitary states

Democracy · Economic rent · Economics · Excise · Extant taxon · Macroeconomics · Microeconomics · Political science · Politics · Public economics · Revenue · Sociology · Unitary state · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Taxation and Compliance Studies · Finance

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