Fiscal transfers, local government, and entrepreneurship
Danisewicz,Piotr Ongena,S.R.G.
Danisewicz,Piotr
Ongena,S.R.G.
Abstract
Can local government spending spur entrepreneurial activity? To answer this question, we study a setting where, around multiple pre-determined and non manipulable thresholds, municipalities with lower tax revenues receive direct and different monetary grants from the national budget. Employing a fuzzy regression discontinuity design, we find a positive impact of fiscal transfers on the number of firms, especially sole proprietorships and small firms. The impact is stronger in municipalities where the opposition is more involved in the legislative process or more parties are represented in the municipal council.
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Publisher Copyright: © 2023 The Authors. Journal of Policy Analysis and Management published by Wiley Periodicals LLC on behalf of Association for Public Policy and Management.
Date
2024-06
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Danisewicz, P & Ongena, S R G 2024, 'Fiscal transfers, local government, and entrepreneurship', Journal of Policy Analysis and Management, vol. 43, no. 3, pp. 818-845. https://doi.org/10.1002/pam.22532