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Fiscal transfers, local government, and entrepreneurship


Danisewicz, Piotr; Ongena, Steven (2023). Fiscal transfers, local government, and entrepreneurship. Journal of Policy Analysis and Management:Epub ahead of print.

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.

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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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > General Business, Management and Accounting
Social Sciences & Humanities > Sociology and Political Science
Social Sciences & Humanities > Public Administration
Scope:Discipline-based scholarship (basic research)
Language:English
Date:4 October 2023
Deposited On:09 Jan 2024 13:45
Last Modified:30 Apr 2024 01:46
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:0276-8739
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1002/pam.22532
Other Identification Number:merlin-id:24231
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)