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Local inequality and project choice: Theory and evidence from Ecuador

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Author Info
Araujo, M. Caridad
Ferreira, Francisco H.G.
Lanjouw, Peter
Özler, Berk

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Abstract

This paper provides evidence consistent with elite capture of Social Fund investment projects in Ecuador. Exploiting a unique combination of data sets on village-level income distributions, Social Fund project administration, and province-level electoral results, we test a simple model of project choice when local political power is unequally distributed. In accordance with the predictions of the model, poorer villages are more likely to receive projects that provide excludable (private) goods to the poor, such as latrines. Controlling for poverty, more unequal communities are less likely to receive such projects. Consistent with the hypothesis of elite capture, these results are sensitive to the specific measures of inequality and elite power used in the empirical analysis, and are strongest for expenditure shares at the top of the distribution.

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File URL: http://www.sciencedirect.com/science/article/B6V76-4RDS3YG-1/1/22d2052332b4b98fa818cfd97ced8297
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Publisher Info
Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 92 (2008)
Issue (Month): 5-6 (June)
Pages: 1022-1046
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Handle: RePEc:eee:pubeco:v:92:y:2008:i:5-6:p:1022-1046

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Web page: http://www.elsevier.com/locate/inca/505578

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  1. Elbers, Chris & Lanjouw, Jean O. & Lanjouw, Peter, 2002. "Micro-level estimation of welfare," Policy Research Working Paper Series 2911, The World Bank. [Downloadable!]
  2. Roland Benabou, 2000. "Unequal Societies: Income Distribution and the Social Contract," American Economic Review, American Economic Association, vol. 90(1), pages 96-129, March. [Downloadable!] (restricted)
  3. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2005. "Imputed welfare estimates in regression analysis," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 101-118, January. [Downloadable!] (restricted)
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  4. Elbers, Chris & Lanjouw, Peter F. & Mistiaen, Johan & Ozler, Berk & Simler, Ken, 2004. "On the unequal inequality of poor communities," Policy Research Working Paper Series 3313, The World Bank. [Downloadable!]
    Other versions:
  5. Mansuri, Ghazala & Rao, Vijayendra, 2004. "Community-based (and driven) development : A critical review," Policy Research Working Paper Series 3209, The World Bank. [Downloadable!]
    Other versions:
  6. John Newman & Menno Pradhan & Laura B. Rawlings & Geert Ridder & Ramiro Coa & Jose Luis Evia, 2002. "An Impact Evaluation of Education, Health, and Water Supply Investments by the Bolivian Social Investment Fund," World Bank Economic Review, Oxford University Press, vol. 16(2), pages 241-274, August.
  7. Jeff Dayton-Johnson & Pranab Bardhan, 2002. "Inequality And Conservation On The Local Commons: A Theoretical Exercise," Economic Journal, Royal Economic Society, vol. 112(481), pages 577-602, July. [Downloadable!] (restricted)
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  8. Robert S. Chase, 2002. "Supporting Communities in Transition: The Impact of the Armenian Social Investment Fund," World Bank Economic Review, Oxford University Press, vol. 16(2), pages 219-240, August.
  9. Gans, Joshua S. & Smart, Michael, 1996. "Majority voting with single-crossing preferences," Journal of Public Economics, Elsevier, vol. 59(2), pages 219-237, February. [Downloadable!] (restricted)
  10. Menno Pradhan & Laura B. Rawlings, 2002. "The Impact and Targeting of Social Infrastructure Investments: Lessons from the Nicaraguan Social Fund," World Bank Economic Review, Oxford University Press, vol. 16(2), pages 275-295, August.
  11. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, vol. 71(1), pages 355-364, January. [Downloadable!] (restricted)
  12. Bardhan, Pranab & Mookherjee, Dilip, 2005. "Decentralizing antipoverty program delivery in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 675-704, April. [Downloadable!] (restricted)
  13. Francisco H.G. Ferreira, 2001. "Education for the masses? The interaction between wealth, educational and political inequalities," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(2), pages 533-552, July. [Downloadable!] (restricted)
  14. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April. [Downloadable!] (restricted)
  15. Dixit, Avinash K & Londregan, John, 1994. "The Determinants of Success of Special Interests in Redistributive Politics," CEPR Discussion Papers 1054, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  16. Pranab K. Bardhan & Dilip Mookherjee, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May. [Downloadable!] (restricted)
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