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03-01-2021

Cold bacon: co-partisan politics in Brazil

Authors: Diogo Baerlocher, Rodrigo Schneider

Published in: Public Choice | Issue 1-2/2021

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Abstract

This paper provides evidence of alignment effects between the executive and the legislative branches of the central government. We rely on detailed data on Brazilian intergovernmental grants whose allocations are determined by legislators. The executive branch cannot interfere with the destinies or volumes of grants, but it can control the transfer pace. We group the data into municipalities and estimate the effects of the share of aligned legislators associated with a municipality on the average time to receive grants. We show that legislators politically aligned to the executive branch transfer resources to their constituencies nine months faster than unaligned legislators. To achieve a causal interpretation of these results, we rely on exogenous variations in the shares of elected aligned legislators caused by the phased-in introduction of electronic voting. Our findings regarding how political alignment affects the speed of transfer are consistent across different periods and alternative definitions of the dependent variable.

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See Firpo et al. (2015) for a detailed definition of associated legislators. We also discuss the variable in Sect. 3.2.

Although possible, that source of endogeneity is less of an issue because voters do not know the party of the executive central government before they elect their federal legislators since all politicians comprising the central government are elected simultaneously in Brazil.

Voters had to write the name or number of their legislative candidates on the old paper ballot, but for executive elections, they were required only to make a mark close to the candidates’ names that already were printed on the ballot. The new voting system, by requiring voters to type the number of their preferred candidate into a machine, did not affect votes for executive branch candidates.

Effective candidates are measured as the inverse of the Herfindahl-Hirschman Index (HHI) of the votes candidates received in each municipality. The effective number of candidates is based on Laakso and Taagepera (1979)’s measure of the effective number of parties and is used commonly in the literature.

In an interview conducted in Brasília, a bureaucrat working at the Confederação Nacional de Municípios, a branch of the government responsible for the execution of projects, confirmed that they have instructions to speed up the grant process for legislators belonging to the same coalition as the president.

For example, Finan and Mazzocco (2016) estimate that 26% of legislators’ funds in Brazil are misallocated, compared a social planner’s allocation, suggesting that politicians allocate public funds for political benefits.

Rodden and Arretche (2004) is an example.

A competing theory, with seminal contributions by Lindbeck and Weibull (1987) and Dixit and Londregan (1998), suggests that politicians should target “swing voters” to maximize votes. That hypothesis was tested successfully for many countries, e.g., Australia (Worthington and Dollery 1998) and Sweden (Dahlberg and Johansson 2002; Johansson 2003).

Although that feature helps to understand the mechanism behind our empirical strategy, it is not necessary. As we show in Table 4, our results extend when we include the reelection of Cardoso in 1998 to our sample. Also, Table OA.21 in the Appendix—available on request—shows that the result holds when we enter only 1998 into the analysis.

The choice of the cutoff (40,500 voters) was based on the number of voting machines available in Brazil at the time. The number of registered voters in 1996 was used to determine the cutoff to avoid manipulation of the electorate in response to EV. Finally, the selection of the four states where EV was introduced was based on geography (remote locations with difficult access, i.e., Amapá and Roraima) and military reasons (states with military bases, i.e., Rio de Janeiro and Alagoas) to test both the ability of electoral authorities to access remote places and to rely on military assistance to implement EV (Fujiwara 2015).

Fujiwara (2015) shows that enfranchisement was exceptionally high among illiterates and that the consequence was an increase in state expenditure on public healthcare, which improved health outcomes. Schneider et al. (2019) construct a theoretical model showing that as electronic voting disproportionately enfranchised low-income voters, policymakers provided more public goods from which low-income voters cannot be excluded, but contribute smaller shares of the tax revenue collected for their provision. The authors report empirical evidence at the municipality level that local taxation and public provision of health, education, and public employment rose, corroborating their empirical model.

As in Montero (2012), we define left wing parties as being one of the following: Partido dos Trabalhadores, Partido Democrático Trabalhista, Partido Comunista Brasileiro, Partido Popular Socialista, Partido Comunista do Brasil, Partido Socialista Brasileiro, Partido Socialista dos Trabalhadores Unificados, Partido Verde, Partido Socialismo e Liberdade, or Partido da Causa Operária.

A maximum amount of money and requests for amendments is set for each member of Congress. Each member currently can claim up to 25 amendments and has approximately USD 4 million to allocate across municipalities. In the period we analyze, close to 85% of the approved amendments’ total value was executed. Thus, the discretion over project execution is less of a concern in our analysis.

On January 15th, 1997, the normative instruction number one of the Brazilian National Treasury Secretariat. established in chapter six, article 21, provided that grants allocated to public projects should be transferred obeying a schedule that was proposed previously and approved by the central government.

See, for example, Modzeleski (2017).

See Angrist (1991) and Lleras-Muney (2005) for examples of grouped data estimates.

We obtain the same conclusions when we exclude the last year from the construction of the dependent variable. The results are presented in the Appendix Tables OA.19 and OA.20, available on request.

We also estimate the models on the average number of days to transfer. The results are unchanged and are available in the Appendix Tables OA.16 to OA.19, available on request.

The definition of associated candidates is crucial because there is no formal relationship between legislators and municipalities. To that point, we follow Firpo et al. (2015) who assign associated candidates to municipalities according to their performance in the local election and the degree of political competition. Specifically, they define associated candidates for municipality m in election year t as legislators elected in year t whose ranks in municipality m and election year t are less than the number of effective candidates in the same municipality and election year. The number of effective candidates depends on vote’s concentration computed by the Herfindahl-Hirschman Index.

The coalition that supported the president elected in 1998 was formed by the following political parties: Partido da Social Democracia Brasileira, Partido do Movimento Democrático Brasileiro, Partido da Frente Liberal, Partido Progressista Brasileiro, Partido Trabalhista Brasileiro, and Partido Social Democrático. The following parties built the coalition that supported the president elected in 2002: Partido dos Trabalhadores, Partido Democrático Trabalhista, Partido Popular Socialista, Partido Verde, Partido Liberal, Partido Comunista do Brasil, Partido da Mobilização, Partido Comunista Brasileiro, Partido Progressista Brasileiro, and Partido Trabalhista Brasileiro.

We omit the few projects with negative times to transfer.

We also report results comparing treatment and control groups only in 1998 to avoid this double effect of persistence plus the change in the president’s ideology. The results are in Table OA.21 in the Appendix—available on request—and are unchanged.

Although we observe increases in the share of votes to left wing parties in presidential elections in the group that adopted EV in 1998, the increase was not enough to elect a left wing president in 1998. Still, one may be concerned about the president punishing such municipalities. In the Appendix Tables OA.6 to OA.15, available on request, we provide evidence that our results hold when we restrict our sample to municipalities with less than 50,000 and 40,500 voters. In these samples, we do not observe a difference in the shares of votes of leftist candidates in the presidential elections. We also show that our results hold when we control for this variable in the Appendix Tables OA.22 and OA.23.

See Schneider et al. (2019) for a comprehensive discussion concluding that the two groups are comparable.

The conclusions stand when we perform the analysis assuming the same weights for all municipalities. The results are presented in Appendix Tables OA.1 to OA.5, available on request.

Recall that in the first year the grants were approved by the previous legislator holding the authority to amend budgets.

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Title: Cold bacon: co-partisan politics in Brazil
Authors: Diogo Baerlocher
Rodrigo Schneider
Publication date: 03-01-2021
Publisher: Springer US
Published in: Public Choice / Issue 1-2/2021
Print ISSN: 0048-5829
Electronic ISSN: 1573-7101
DOI: https://doi.org/10.1007/s11127-020-00869-4

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