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Political turnover, public employment, and local economic development: New empirical evidence on the impact of local political dynasties in the Brazilian “Nordeste”

Author

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  • Eric Rougier

    (University of Bordeaux)

  • François Combarnous

    (University of Bordeaux)

  • Yves-André Fauré

    (University Paris 1)

Abstract

The present paper assesses the impact of the size of the municipal public sector on local economic growth and the extent to which it is conditioned by different forms of political turnover. By relying on small but original dataset on municipalities of the Brazilian state of Ceará over the period 2000–2012 and by addressing both endogeneity and spatial correlation issues, we find evidence of an adverse effect of the size of public employment on local economic growth, which is moderated by higher political stability when taking the form of dynastic control. We also find that the size of public employment crowds in public investment in our sample, with this positive pattern being amplified in municipalities controlled by political dynasties where policy’s continuity is higher. Our findings therefore reject the assumption of a crowding-out effect of redistributive politics on public investment for the municipalities of Ceará. Our medium-run framework therefore suggests that political dynasties can be advantageous for local economic growth in our limited sample of municipalities. Yet, in the longer-run, the balance between the positive stabilization effects and the possible adverse effects related to corruption should be investigated by future research.

Suggested Citation

  • Eric Rougier & François Combarnous & Yves-André Fauré, 2022. "Political turnover, public employment, and local economic development: New empirical evidence on the impact of local political dynasties in the Brazilian “Nordeste”," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 2069-2097, August.
    • Handle: RePEc:pal:eurjdr:v:34:y:2022:i:4:d:10.1057_s41287-021-00453-6
    DOI: 10.1057/s41287-021-00453-6
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    More about this item

    Keywords

    Local economic development; Municipal public employment; Political turnover; Public–private wage gap; Dynastic control; Name analysis; Brazil;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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