Distributional Effects of Intergovernmental Transfers in Mexico
A rigorous understanding of the developmental effect of fiscal transfers to subnational governments remains an important policy research issue globally. This paper exploits a novel dataset of 20 years of municipal poverty maps and local public finances to study the effects on local welfare of a...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/238121586438967113/Distributional-Effects-of-Intergovernmental-Transfers-in-Mexico http://hdl.handle.net/10986/33603 |
| Summary: | A rigorous understanding of the developmental effect of
fiscal transfers to subnational governments remains an
important policy research issue globally. This paper exploits
a novel dataset of 20 years of municipal poverty maps and
local public finances to study the effects on local welfare of
a large fiscal transfer fund earmarked for social investment
in more than 2,000 Mexican municipalities. Results show a
positive but modest effect on the average household income,
and positive effects on seven nonmonetary welfare measures.
In contrast, these funds have no significant impact on
extreme and moderate monetary poverty. These results provide
important lessons for policy on the effects of earmarked
funds to reduce territorial poverty and inequality in terms
of incentives to design formulas to distribute earmarked
fiscal resources to subnational governments. |
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