Distributional Effects of Intergovernmental Transfers in Mexico

Arbeitspapier

A rigorous understanding of the developmental effect of fiscal transfers to subnational governments remains an important policy research issue globally. This paper exploits a novel dataset of 20 years of municipal poverty maps and local public finances to study the effects on local welfare of a large fiscal transfer fund earmarked for social investment in more than 2,000 Mexican municipalities. Results show a positive but modest effect on the average household income, and positive effects on seven nonmonetary welfare measures. In contrast, these funds have no significant impact on extreme and moderate monetary poverty. These results provide important lessons for policy on the effects of earmarked funds to reduce territorial poverty and inequality in terms of incentives to design formulas to distribute earmarked fiscal resources to subnational governments.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 13148

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models: Single Variables: Instrumental Variables (IV) Estimation ; Distribution: General ; State and Local Budget and Expenditures ; Intergovernmental Relations; Federalism; Secession
• Subject: fiscal federalism ; earmarked transfers ; decentralization ; poverty ; Mexico

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rodriguez Castelan, Carlos ; Cadena, Kiyomi ; Herrera, Laura Moreno
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/216460
• Last update: 10.03.2025, 11:42 AM CET