Local Electoral PDF

LOCAL ELECTORAL INCENTIVES AND DECENTRALIZED PROGRAM PERFORMANCE
Author(s): Alain de Janvry, Frederico Finan and Elisabeth Sadoulet

Source: The Review of Economics and Statistics , August 2012, Vol. 94, No. 3 (August
2012), pp. 672-685
Published by: The MIT Press
Stable URL: https://www.jstor.org/stable/23261471
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LOCAL ELECTORAL INCENTIVES AND DECENTRALIZED
PROGRAM PERFORMANCE
Alain de Janvry, Frederico Finan, and Elisabeth Sadoulet*
Abstract—This paper analyzes how electoral incentivesnowaffected

part the
of aper
broader program called Bolsa Familia, was a
formance of a major decentralized conditional cash transfer program
federal program,
intended on reducing school dropout rates among children of poor house municipal governments were responsible
for identifying
holds in Brazil. We show that while this federal program successfullybeneficiaries and enforcing conditionalities.
reduced school dropout by 8 percentage points, the program's impact was
This created substantial variation across municipalities in
36% larger in municipalities governed by mayors who faced reelection
the manner
possibilities compared to those with lame-duck mayors. First-term in which
mayors the program was implemented and in
with good program performance were much more likelyits to impact. Using an
be reelected. extensive data set that combines a
These mayors adopted program implementation practices that were
municipal not with school records for 290,517 children
survey
only more transparent but also associated with better program outcomes.
over the period 1999 to 2003 (with two years before the
program and three years under the program), we estimat
the program's impact on primary and secondary school
I. Introduction
dropout rates for each of 261 municipalities in the northeast
of Brazil. We then identify the impact of municipal ele
MANY countries
tion of public have decentralized
programs to locally the toral incentives on local politicians' program performanc
implementa
elected govern
by using the constitutional two-term limit for reelection and
ments in seeking efficiency gains in performance (Bardhan,
measuring the difference in achievement between first- and
2002). The expectation is that local governments have
unique advantages in allocating public resources, second-term
such as mayors. While many studies in constitutiona
access to information not available to central authorities economics have posited the importance of electoral incen
(Faguet, 2004). tives for effective decentralized services delivery (World
In practice, however, decentralized program implementa Bank, 2003), this study is among the first to support this
empirically.
tion may not meet this expectation. Although the informa
tional advantages associated with decentralization We find that although the program reduced dropout rates
have
been shown to exist (Alderman, 2002), use of this informa the school year by 8 percentage points on average,
during
tion for efficient program implementation depends there
on was considerable variation across municipalities
Municipalities that happened to be governed by a first-term
whether local governments can in fact be held accountable
to constituents for their efforts (Seabright, 1996; mayor
World had an estimated 36% higher program performanc
compared
Bank, 2003). How to achieve this has long been debated to municipalities governed by a second-term
mayor.
(Rose-Ackerman, 1999). The accountability of local gov This difference persists when comparing second-term
mayors to first-term mayors who were reelected in the subse
ernments to program stakeholders requires political institu
tions that give citizens the ability to discipline electedquent
offi election, thus controlling for revealed ability, and to
cials (Persson & Tabellini, 2002). This may be missing. For with a comparable level of political experience.
mayors
Using municipal-level election data, we show that first
instance, term limits may curtail incentives for politicians
to make efforts in providing high-quality local public goodsmayors had reason to care about good program perfor
term
when they can no longer seek reelection (Besley, 2006).mance. The probability of reelection was 28% higher for
Local politicians' performance in program implementation who were in the top quartile of program impacts.
mayors
Mayors with no public denouncements of inclusion error
would thus depend on the existence of electoral incentives
for them to make good use of the informational advantages also rewarded with a 26% higher probability of reele
were
they possess. tion. We show that a number of good management practices
In this paper, we investigate the extent to whichrelated
local to transparency that affect program performance
electoral incentives affect the level of impact of a majormore frequently associated with first- than second
were
decentralized conditional cash transfer (CCT) program term inmayors, indicating how better performance actually
came about.
Brazil, Bolsa Escola, designed to reduce school dropout
Our findings contribute to a growing empirical literature
among the children of the poor. Although Bolsa Escola,
in constitutional economics that emphasizes the importance
Received for publication September 1, 2009. Revision accepted of
forelectoral
pub accountability in aligning politicians' actions
lication December 10, 2010. with voters' preferences. Foster and Rosenzweig (2004)
* de Janvry: University of California, Berkeley; Finan: University
show inof Indian villages that greater electoral competition in
California, Berkeley, BREAD, IZA, and NBER; Sadoulet: University of
California, Berkeley. controlling governing bodies and a higher share of poor
landless
We are indebted to Kathy Lindert, Benedicte de la Briere, Donald Nel in the voting population increase the allocation of
son, Lucia Chaves, Simone Cabral Marinho dos Santos, Irles Mayorga,
public budgets toward pro-poor local public goods. Besley
and Julia Morim in helping us implement this research project, and to the
and Case
World Bank, the UNESCO, and the U.K. Department for International (1995) found that reelection incentives affect the
fiscal
Development for financial assistance in covering the cost of the survey. policy decisions of U.S. governors. Consistent with a
The Review of Economics and Statistics, August 2012,94(3): 672-685

© 2012 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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LOCAL ELECTORAL INCENTIVES AND DECENTRALIZED PROGRAM PERFORMANCE 673
model where incumbents who are willing ato powerful instrument

run again seek in enhancing the quality of imple
to build their reputations with the electorate
mentation
throughof decentralized
their public programs.
achievements, governors with reelection possibility
The paper is organized
make as follows. In section II, we pro
greater efforts to keep taxes and expenditurespose down
a modelrelative
of local electoral incentives that highlights
theList
to those in their final term. In a similar vein, differences
and Sturmin effort in program implementation
(2006) provide evidence that electoral incentives influence
between first-term and second-term mayors. In section III,
the environmental policy choices of U.S.wegovernors
present the even
features of the Bolsa Escola program and
review
though these are not frontline policy issues. Inresults
statesobtained
with in previous evaluations. In section
IV, weenvironmen
large groups of green voters, they pursue more explain the data collection and present descriptive
tally friendly policies when they can be reelected
statistics than
on dropout
when rates across municipalities. We explain
the in
they face binding term limits, and vice versa method
states for measuring program performance at the
with
small environmental constituencies. Using municipality
the outcomeslevel in
ofsection V. We then report in section
random audits of municipal finances in Brazil,
VI resultsFerraz
on the and
impact of Bolsa Escola on dropout rates.
Finan (2011) have shown that mayors that In face
section VII, we give estimates of the gains in perfor
reelection
mance
incentives are significantly less corrupt than due towithout
mayors electoral incentives. In section VIII, we inter
such incentives. While both Ferraz and Finanpret the(2011)
results and
by verifying that electoral rewards do
accompany
this paper analyze the role of local electoral good program
incentives on performance and exploring
politicians' performance, the papers differ through which governance practices first-term mayors
in a complemen
achieve superior
tary fashion: the first focuses on rents extracted using cor program performance. We conclude in
ruption practices, while the second focuses section IX on themade
on efforts benefits of electoral incentives for decen
in achieving public program performance. tralized program performance.
Much of the empirical work on the effectiveness of
decentralized services deliveiy has focused on how decen
tralized programs are targeted, due in large part II.
toA the
Model of Local Electoral Incentives
fact
that measures of program performance were unavailable.
In this section, we construct a simple political econom
For instance, Alderman (2002) has shown that the local
model to show how electoral incentives can affect the p
level informational advantage was used by local authorities
formance of a decentralized program when its performanc
in Albania to better target the poor. Both Galasso and
depends on efforts made by an elected municipal offici
Ravallion (2005), in the case of public food-for-school
The program is one where municipalities must select be
transfers in Bangladesh, and Bardhan and Mookherjee
ficiaries among qualifying households, the number of whic
(2006), in the case of credit and agricultural input kits in
exceeds the exogenous quota of school stipends that
West Bengal villages, found that program and village fea
municipality can allocate. Because qualifying children ar
tures affected the degree of local pro-poorness in the decen
heterogeneous in their responses to the offer of a stipen
tralized targeting. But ultimately what we care about is the
the impact of the program is largely due to the selecti
impact of the program, and targeting may not be a good
of beneficiaries. The central government's objective is t
indicator of program performance (Ravallion, 2007). Our
reduce school dropout, while the local government's obj
paper, which complements this literature, is the first empiri
tive is reelection with a two-term limit. Voters are informed
cal study to show how the performance of a decentralized
of and concerned with municipal program performance.
program is affected by local institutions, particularly those
The local electorate can thus reward for good performance
that help establish local accountability.
local politicians who are up for reelection. Improving pro
It is fairly well established that politicians can reap elec
gram performance requires politicians to exert costly effort,
toral rewards from public expenditure programs. Access to
but it increases their chances of reelection.1
government transfers has been shown to increase votes for
elected officials who can claim credit for the transfers.
Following the model setup, the local government must
decide whether a child i with characteristics z, is selected or
Levitt and Snyder (1997) thus demonstrated that public
not (Pi e {0,1}), given the number of stipends B allocated
spending is rewarded by voters' electoral support in House
to the municipality. The expected program's impact 0, =
of Representatives elections in the United States. Mana
0(z,) on the school performance of child i depends on his or
corda, Miguel, and Vigorito (2009) found that households
her characteristics. The program's impact in the municipal
that benefited from a cash transfer in Uruguay were more
ity is 0 = £P/0(z,).
likely to give lasting political support to the current relative
to the previous government. Our paper extends these results
1 The model is an adaptation of the standard political agency model
by showing that not only are transfers rewarded, but the
found in Barro (1973), Ferejohn (1986), Banks and Sundaram (1993),
quality of the politician's program performance in terms
and,of
more recently, Alesina and Tabellini (2007). The basic insight from
this class of models is that in a political context in which elections reward
its intended effects is rewarded by a higher likelihood of
politicians' performances, incumbents with reelection possibilities have
being reelected. It is because of this link between program
the incentive to exert effort in the implementation of the program in order
performance and votes that political institutions can betosuch
increase their reelection chances.

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674 THE REVIEW OF ECONOMICS AND STATISTICS
From the perspective of the program

ability. itself,
The mayor sets maximum
his effort to equate current marginal
impact is obtained by giving beneficiary status to
cost to the future marginal benefit of children
being reelected.
Rational
with the highest 0„ in descending voters know
order, that they
until the should expect this optimal
municipal
levelfirst
quota is reached. However, this of effortbest
e*. They will vote the may
outcome incumbent
bein if
difficult to achieve for at least9itwo
> W = reasons.
g(z,B) + a + e* — t, which
First, the reveals
objecthat ai +
tives of the program and of the t > a. Substitutingmay
mayor the expression
not for beW,entirely
the optimal effort
aligned. Second, even if the mayor was
of the first-term mayorconcerned
is the solution to with
maximizing program effectiveness in reducing dropout, to
v|/e. =Ry(a- t).
correctly anticipate a child's response to the program
requires levels of administrative ability and effort that the
The corresponding program impact of a first-term mayor
mayor may not have or be willing to provide.
To formalize these possibilities, consider a two-period
model where citizens choose at §1 = g(z,B)
the end+ fli of
+ e*,the first period
whether to reelect the incumbent mayor. Voters care about
and it is
the program's impact Q(a,t,e,z,B), which is influenced by
the mayor's ability a, experience t, and effort e, with first
02 = g(z, B) + d\ + t
derivatives 0a, 0r, and %e positive, respectively. The
mayor's own utility is also a function of his
in his second-term if hedirect reward
is reelected. First-term R
mayors
from beneficiary selection that can be written as exert effort, while second-term mayors have experience.
R(a, t, e, z, B), which is decreasing in effort Re < 0. To sim The average performance across mayors in their first
plify further the derivation of the model, we assume that the term is
program impact is 0 = g(z,B) + a + t + e and the politi
cian's utility is R — *J/(e), with \Jie > 0, v|iee > 0. As defined §i =g{z,B) +a + e*.
here, e represents the effort the mayor exerts in the selection
of beneficiaries and the administration of the program. With selection, the average performance of second-term
Although more effort does increase the program's impact,mayors is
the mayor experiences a disutility from exerting effort.
The timing of events is as follows. First, the mayor selects
02 = g(z,B) + ? + a(p(a)da,
the beneficiaries. His ability to select beneficiaries is a random
variable a\ : <D(a, ct^), unknown even to him in the first per
iod. He chooses the amount of effort to exert in increasing theand the difference is
impact of the program. At the end of the first period, voters
00
observe the outcome 0i, but not its decomposition between
ability and effort. Based on this observation, they decide 0i - 02 = - — t.
whether to reelect the incumbent. If the incumbent is reelected, | a<p(a)da — a

his ability is maintained, and he has gained experience t. Other
wise, a challenger comes in with an ability randomly drawn The first term is positive and represents the effort exerted
from the distribution of abilities and no experience. In period by the mayors in their first term in response to the reelection
2, the mayor chooses again the level of effort to exert, thus incentive, while the two other factors are negative, repre
determining the impact 02 of the program for that period. senting the lower average ability and experience of first-term
Because the game ends in period 2, there is no electoralmayors. As this comparison makes explicit, the difference
incentive for mayors to exert any effort in the second per in program performance between first- and second-term
iod. Thus, the program's impact in the second period is mayors captures both a selection effect of the elections
g(z,B) +a\+t if the incumbent is reelected; otherwise theand an incentive effect from the possibility of reelection.
expected impact is g{z,B) + a. Unable to induce politicians Although it is difficult to identify each effect separately, a
to exert effort, voters will seek to elect the mayor with the positive difference suggests that the incentive effect induced
highest combination of ability and experience. The incumby the possibility of reelection dominates the selection effect
bent is reelected if the impact is higher than a threshold W of having second-term mayors with higher ability and more
that reveals that he would do better in the future than the experience. Implicit in our model is the assumption that
average politician. voters care about the program's impact. Voters, however,
The first-term mayor's intertemporal objective is may care only about whether they themselves are program
beneficiaries. In this case, the incentive politicians have to
maxR — v|/(e) + Pr(Qi > W)R. target the program might be quite different from those pre
sented in the model. In fact, mayors who face reelection pos
The optimal effort e* is the solution to v|/e, = sibilities may prefer to target potential swing voters regard
/?<p(W — g(z,B) — e*), where (p is the density functionless
of of their children's risk of dropping out of school in

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order to garner support from this group (Besley

For the city
& Kanbur,
of Recife, Aguiar and Araujo (2002) found that
1993). In this case, the program would perform
dropout rates
worse
were in
0.4% among beneficiaries in 1996 com
municipalities with first-term mayors. Here
pared
again,
to 5.6%
observing
among nonbeneficiary children, a gain of 5.2
percentage
better first-term program performance has points.
to come These results are of the same order of
from
electoral incentives, especially if elections induce
magnitude
first-term
as those that we report here, even though these
clientelism games. early programs were somewhat different from the federal
program as transfers were higher and the program's require
ments were weakly enforced. Using municipal-level data,
III. The Bolsa Escola Program Glewwe and Kassouf (2008) find that Bolsa Escola/Familia
once extended at the national scale reduced dropout rates by
Primary and secondary education are compulsory in Bra
about 8 percentage points for children in grades 1 to 4 but
zil for children ages 6 to 15, and as a consequence, enroll
did not affect the dropout rates of children in grades 5 to 8.5
ment at the beginning of the school year is almost universal
This evaluation of Bolsa Escola uses a rigorous identifica
(Souza, 2005). But high enrollment rates hide a major pro
tion of impact based on observed individual child responses
blem in that a large number of children drop out of school
to the incentives provided by the CCT. Measurements are
during the school year, only to reenroll the following year
obtained both overall and for each municipality for the
as required by law.2 This induced the Brazilian government
2001-2003 period. We then use these measures of municipal
to introduce an educational CCT program, Bolsa Escola,
performance to analyze the importance of electoral incen
that offered mothers in poor households a monthly stipend
tives and of local governance practices on observed out
conditional on their children ages 6 to 15 attending school
comes. Identification of electoral incentives on performance
on a regular basis. Households with a monthly per capita
is provided by the fact that introduction of Bolsa Escola in
income of less than 90 reais (around $40) were eligible.
2001 happened exogenously relative to the first- or second
The transfer was R15 per child with a maximum of R45 per
term status of the current mayor. Electoral outcomes are
household.3 While the eligibility and conditionality rules
observed in the subsequent municipal election held in 2004.
were similar to those of other educational CCT programs
such as Mexico's Oportunidades, a distinguishing feature of
IV. Data and Descriptive Statistics
the Bolsa Escola program is that it was decentralized at the
municipal level. Each municipality received a quota of sti Data collection for the project took place between Octo
pends it could provide to its population. This quota was ber and December 2004 in 261 municipalities randomly
determined on a formula basis using indicators from theselected across the states of Ceara, Pernambuco, Paraiba,
1996 population census. Municipalities were responsible and Rio Grande do Norte in the Brazilian Northeast.6 In
for identifying all households below the poverty line with each of the 261 municipalities, two data collection instru
children who met the program's requirements. Because the ments were applied, compilation of school records and a
number of qualified households generally exceeded the municipal survey, complemented by secondary data on the
quota, it was also the municipality's responsibility to select municipality regarding Bolsa Escola payment records and
program beneficiaries among qualifying households. Trans electoral outcomes.
fers to the selected beneficiaries were made directly by Bra
silia to their bank accounts at the program's set level with A. School Records
no municipal discretion. Municipalities were entrusted with
enforcing the school attendance conditionality.4 The pro To properly measure the effects of Bolsa Escola
gram was implemented across all of Brazil in 2001 and school dropout, we collected in each municipality sch
records for at least 500 children over the 1999-2003
incorporated in 2004 into the current Bolsa Familia pro
gram (Lindert et al., 2006). period.7 To gather these records, one or two schools
Bolsa Escola was first conceived in the Federal District of randomly drawn proportionately to the number of B
Brasilia and extended to cities like Recife before beingEscola recipients (this number was obtained from th
scaled up into a national program. Two studies have ana
5 Bourguignon, Ferreira, and Leite (2003) provided an ex ante e
lyzed these earlier forms of the program. For the Federal
tion of Bolsa Ecola. Using a simulation model based on observed
District, Abramovay, Andrade, and Waiselfisz (1998) found
schooling responses to labor market wages estimated from the P
that dropout rates were 7 percentage points lower for benefi
data, they find that over 50% of the children of poor households
respond to the incentives of the program. This implies halving the p
ciary children than for children of nonbeneficiary families.
gram dropout rate, again a result not far from our own estimates.
6 The municipalities of these four states were stratified accordi
2 In our sample, 98% of the children who dropped out at some pointtheir land inequality, size of public sector, and quota of program be
during the year registered again in school in some later year. aries and were randomly sampled from eight strata. The sample was
3 As a comparison, the minimum wage was R240 per month. tified to capture sufficient variation along variables that may be corr
4 Every three months, teachers were required to compile the monthlywith governance and importance of the program.
attendance of program beneficiaries and send them to the secretary of 7 The school year in Brazil runs from February to December. W
observe two complete years before the program (1999 and 200
education of the municipality and Brasilia. It is from these attendance
sheets that the conditionally was imposed. three complete years with the program (2001-2003).

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Table 1.—Summary Statistics on Dropout Rates
Proportion of Dropout Rates Difference-in-Differences Difference-in-Differences

Beneficiaries in (base year = 1999) (base year = 1999)
Dropout Beneficiary Nonbeneficiary OLS Fixed-Effects
Year (1) (2) (3) (4) (5)
1999 0.182 0.020 0.058

2000 0.228 0.031 0.093 -0.024 -0.002
[0.003] [0.002]
2001 0.236 0.026 0.112 -0.048 -0.065
[0.003] [0.002]
2002 0.246 0.040 0.133 -0.055 -0.084
[0.003] [0.002]
2003 0.256 0.061 0.154 -0.055 -0.091
[0.004] [0.003]
Dropout is defined as dropping out before the end of the school year. The sample includes 118,234 children who were enrolled in both 1999 and 2000. "Beneficiaries" refers to children who benefited from the pro
gram from 2001 to 2003. Column 4 reports the difference-in-differences estimates by year using 1999 as a base year. Column 5 reports the difference-in-differences estimates by year using 1999 as a base year with
child fixed effects.
ments records of the Ministry of Education) within each whether the program was targeted according to certain
selected municipality. Information on the enrollment status observable characteristics of children other than their prior
of each child in the school was compiled from the annual school attendance and achievement status. Second, we can
class reports filled in by teachers. Matching records across not follow children who transfer out of the school. How
school years was done manually using children's first and ever, we can observe if the child transferred to another
last names, allowing us to match 85% of the collected school (as opposed to being reported as missing school),
records.8 In total, we can follow the school performance for and we see that less than 4% of the children who droppe
290,517 children in primary and secondary school over part out had transferred. In the analysis that follows, we
or all of five years, giving us 604,561 data points.9 removed these children from the sample.
In the class reports, which are compiled at the end of Table 1 demonstrates the magnitude of the school drop
each school year, teachers provide the full list of students out problem that Bolsa Escola was designed to address. It
who started the year and then indicate, by the end of the presents the school dropout rates of beneficiaries and non
year, if a child has passed the grade, failed the grade, trans beneficiaries by year for the sample of children who were
ferred to another school, dropped out of school, or died.10 enrolled in both 1999 and 2000, which represents our main
Thus, our measure of dropout indicates any child who did estimation sample. In 2000, the year before the program
not complete the school year but neither transferred to started, 9.3% of nonbeneficiary children dropped out of
another school nor died. It is not related to the attendance school during the course of the year (see column 3). This
records reported to the Bolsa Escola administration. percentage increases over time, and by 2003, 15.4% of th
Although administrative records have the advantagesample of had dropped out at some point during the school
providing a large data set with greater accuracy than self year. The steady increase over time reflects the fact that
reported information on attendance and grade promotion, these children are getting older and are much more likely to
not having conducted household interviews results indrop at out at higher grades.
least two shortcomings. First, we do not have information The dropout behavior of nonbeneficiaries stands in stark
on children and household characteristics. And while the contrast to that of program beneficiaries, whose dropout
use of child fixed effects eliminates any biases associated rates range from 2% to 6.1% during the period. This com
with our inability to control for time-invariant characteris
parison not only provides some initial insights into the pro
gram's impact but also reveals the extent of selection that
tics of the child and his or her family, lack of information
occurred in the program's targeting. For instance, only
prevents us from exploring how the impacts vary according
to these characteristics. Moreover, we cannot investigate
3.1% of the program beneficiaries had dropped out in the
year prior to the introduction of the program.
Given that the program was targeted to children with
8 The remaining 15% include cases where the child either left school
without this being recorded or the child's name was simply changed,
lower dropout propensities, the use of child fixed effects in
incomplete, or unreadable. With no discernable pattern in the occurrence
estimating
of these cases across grades, it is unlikely that any of these reasons could the program's impact becomes critical to
be correlated with being a stipend recipient. Also, restricting theaccount
estima for this initial selection. This can be seen clearly in
tion to the balanced panel of children yields similar results. columns 4 and 5 of table 1. In column 4, we present the
9 The target was to have at least 500 current students per municipality,
which led to an average of 1,100 students in the school records unadjusted
as many difference-in-differences estimate by year.
Although the estimates during the postprogram years sug
schools are large and we collected information on all students attending
school at any time during the 1999-2002 period.
gest that Bolsa Escola reduced dropout rates among pro
10 The class records are not electronic and not shared with Bolsa Escola.
gram
They do not report on daily school attendance to meet Bolsa Escola conbeneficiaries by about 5 percentage points, we also
ditionality, where cheating could occur. see a 2.4 percentage point decline even prior to the pro

152.118.24.31 on Mon, 28 Sep 2020 05:01:51 UTC
and key members

gram, which raises concerns for our counterfactual assumpof civil society, such as the local priest or
the5,
tion of parallel trends. However, in column president
we see of the
thelabor union. For questions on Bolsa
Escola, wethis
importance of including child fixed effects. Under interviewed
spe the corresponding program coordi
nator about
cification, there is no difference in the change how the municipality identified and selected
in dropout
beneficiaries
rates between beneficiaries and nonbeneficiaries and then
prior to monitored and enforced the condi
tionalities.
introduction of the program. Moreover, the difference is not
Overall we(point
only statistically insignificant but small in magnitude found considerable variation across municipa
estimate = —0.002; robust standard error = 0.002).
lities Given used to identify and register potential
in the procedures
the tightness of the confidence intervals,beneficiaries.
we can rejectDifferences relate to where the registration of
impacts of —0.006. This is an order of magnitude smaller took place, whether efforts were made
potential beneficiaries
than the estimated impact of the program duringto verify the
the post
information given by parents, and whether the
municipality
program years, which are large and statistically had social councils that could engage in deliber
significant,
ranging from —0.065 to —0.091. ating program implementation.12 The number of potential
beneficiaries largely exceeded the quota of stipends that was
allocated to the municipality by the federal government. On
B. Bolsa Escola Eligibility and Beneficiary Status
average, an estimated 49% of eligible households were left
In our school visits, teachers were asked toout identify
of the program,
theleaving it to the municipality to select the
beneficiaries
percentage of children eligible for Bolsa Escola. In every from among the pool of eligible households.
school, teachers identified more than 97% There
of the waschildren
also variation in implementing conditionalities
as qualifying for the program.11 We therefore across municipalities.
consider all While most municipalities reported
the children as eligible. As we will see later, the identifica attendance conditionality, this was
monitoring the school
tion strategy does not depend on the strict eligibility done more strictly
of allin some municipalities than others. Over
children. all, our survey revealed a great deal of heterogeneity across
We obtained the complete list of beneficiaries from themunicipalities in program implementation despite definition
Bolsa Escola federal office for the years 2001 and 2002. of rules at the federal level.
For each household, records include parents' and children's In addition to information on program implementation,
names and the school attended by the child. Matching these the survey was also designed to document governance prac
beneficiaries to the school information gives the beneficiary tices. For instance, in our sample of municipalities, we
status of all the children in the school records. Matchingfound that in 25% of the municipalities, more than 15% of
was again done manually using children's full names (lastthe employees in the mayor's office were related to the
names of both parents and first name of the child). Benefi mayor, indicating nepotism, and in 12% of the municipali
ciary status in 2003 can safely be assumed to be the same as ties, the mayor's spouse was also an elected politician.
in the previous two years, as no reselection was undertaken Across municipalities, 47% of the administrative positions
in that or prior years. were held by political appointees rather than technocrats.13
We have no independent information to confirm the non In table 2, we examine how these governance practices as
beneficiary status of children in the school records that we well as other characteristics of the municipality differ across
could not match with the Bolsa Escola list, and we could those municipalities governed by a first-term mayor (column
1) versus a second-term mayor (column 2). Because of the
not match 25% of the Bolsa Escola list into school records.
need
Matching errors may thus entail beneficiary children mis to assume selection on observables in our second-stage
analysis,
classified as nonbeneficiaries. This would imply that we it is important to understand whether characteris
estimate a lower bound for the impact of the program. tics that are likely to affect program performance also differ
by the mayor's term of office. As the table demonstrates,
there are few differences in observable characteristics
C. Municipal Data between these municipalities. Out of the 24 controls that w
The municipal survey contained several parts designed to
use for our analysis, only three characteristics are stati
cally different at the 10% level (see column 3). As expected
gather general information on municipal and mayor charac
second-term mayors have much more experience and a l
teristics and governance practices and implementation
methods for the Bolsa Escola program. Designated respon ger margin of victory in the 2000 elections. We also see tha
dents for the various sections of the questionnaire were second-term mayors exhibit more nepotism: they are more
likely to hire relatives to work in their office. Aside from
mostly public administrators but also included politicians
these differences, the other characteristics of both the may
11 That 97% of the children were qualified for the program is not sur
prising given both the public school system in Brazil, which is almost12 See de Janvry et al. (2005) for details on these procedures.
exclusively attended by poor children, and the fact that we sampled13 Throughout Brazil's political history, there has been a clear disti
schools with probability proportional to the number of Bolsa recipients.tion between political appointees or "traditional politicians" and tech
crats (te'cnicos) who are appointed individuals with nonpolitical ba
The northeast of Brazil is also the region with the highest incidence of
poverty. grounds (see Hagopian, 1996).

152.118.24.31 on Mon, 28 Sep 2020 05:01:51 UTC
Table 2.—Summary Statistics of Mayors and Municipalities
First-Term Second-Term P-Value of

Mayor Mayor Difference
(1) (2) (3)
Mayor characteristics
Male 0.882 0.939 0.17
Has a primary education 0.848 0.815 0.55
Has a high school education 0.818 0.745 0.22
Has a college education 0.603 0.505 0.18
Age of mayor 0.482 0.490 0.46
Terms of experience 2.295 2.705 0.02
Margin of victory in 2000 elections 0.146 0.221 0.00
Municipal characteristics
Population density 0.001 0.001 0.61
Number of districts 0.029 0.032 0.27
Share of rural population 0.444 0.475 0.23
Literacy rate 0.676 0.668 0.34
Income per capita (logs) 4.226 4.185 0.15
Gini coefficient 0.526 0.518 0.48
A nongovernmental organization exists 0.315 0.350 0.65
Share of population employed by public sector 0.043 0.043 0.53
Judiciary district 0.618 0.553 0.20
Number of radio stations 0.680 0.645 0.85
Has local newspapers 0.209 0.130 0.54
Administrative characteristics
Received Bolsa Escola training 0.205 0.218 0.91
Bolsa Escola council exists 0.790 0.819 0.78
Wife is politician 0.158 0.099 0.27
Degree of nepotism 0.011 0.021 0.09
Share of administrative positions held by a political appointee 0.441 0.503 0.24
Number of secretaries 0.159 0.177 0.32
Program implementation
Average dropout rates prior to the program 0.146 0.136 0.41
Difference in preprogram dropout propensities -0.114 -0.106 0.18
Registered beneficiaries in schools 0.861 0.832 0.78
Received visit from program coordinator 0.286 0.533 0.00
Verified information 0.608 0.657 0.00
Proportion of deliberative social councils 0.700 0.609 0.00
Number of municipalities 98 138
This table presents a comparison of the mean political, mayor, and socioeconomic characteristics of municipalities with first- and second-term mayors. Column 1 reports the means for the 98 municipalities with a
first-term mayor. Column 2 reports the means for the 138 municipalities with a second-term mayor. Column 3 reports the p- value of the test of difference in means using state fixed effects.
(such as gender, education) and the municipality (such as any difference in preprogram dropout rates between first
income per capita, income inequality, and access to media) and second-term mayors.
are all balanced.
In table 2, we also examine differences in preprogram V. Measuring Program Performance
dropout propensities between beneficiaries and nonbenefici
aries and whether these differences differed between first
In this section, we present the econometric specifications
used to estimate the impact of the Bolsa Escola program on
and second-term mayors. To measure a child's propensity
dropout rates. Given the data and research design, we can
to drop out prior to the program, we estimate the following
estimate the impact of the program on beneficiaries for
model of school dropout, Syt, for child i in municipality j in
every municipality in the sample. This program impact pro
period t:
vides a measure of municipal program performance for ana
= <\>ij + JijToo + Y2/(Si99 x Too) + &ijt,
lysis of electoral incentives.
The empirical strategy to measure the effect of Bolsa
for t = 1999 and 2000,
Escola on the selected beneficiaries for each municipality
uses panel data on children before and after the start of the
where Too is a time dummy for the year 2000, S#9 is child
program and proceeds with a number of tests to verify
i's 1999 dropout status, and eiy> is a random error term. We robustness of the results.
then define the municipal-specific child fixed effect, <|>y, as We start with a standard difference-in-differences model
child i's propensity to drop out of school prior to introduc
where schooling outcome is modeled as
tion of the program.
The difference in dropout propensities between benefici Sijt = + 6y P ijt + (1)
aries and nonbeneficiaries is only slightly lower among
first-term mayors relative to second-term mayors, and this where Sjj, is schooling outcome (
difference is not statistically significant. We also do not find dual fixed effect, Xy, are time-v

152.118.24.31 on Mon, 28 Sep 2020 05:01:51 UTC
ing year fixed effects, and Py, is an indicator afor

municipality
program is identified by within-person comparisons
ofmeasures
participation.14 0,y is a random coefficient that changes in dropout
the rates with that of nonbeneficiary chil
gain for individual ij from participating in the program,
dren and
of the municipality with the same preprogram dropout
status.15
&ijt is an unobserved shock to schooling assumed In the empirical analysis, preprogram status is
unrelated
to program participation conditional on X,y,. observed in both 1999 and 2000. With this approach, we esti
With this model for individual behavior, thematetreatment
an averageon
TT impact for each municipality.
the treated (TT) effect in municipality j is givenTobyfurther justify our identification assumption, we pre
sent two additional robustness tests. First, we reestimate the
e,-=£(0,^ = 1), (2) model in equation (1), matching on beneficiaries and non
beneficiaries with the exact same preprogram dropout his
where the conditioning on By = 1 denotes that the indivi
tories (Card & Sullivan, 1988). While similar to equation
dual ij is a beneficiary. This expression highlights the
(3), this model relaxes the functional form assumption and
sources of differentiation in average TT effects across muni
restricts the estimates to areas of common support. Second,
cipalities. Municipal treatment effects may thus differ due
with two years of preprogram data, we compare the changes
to both their selection of beneficiaries from among the
in dropout rates between 1999 and 2000 for future benefici
population and the distribution of individual effects 0,j in
aries and nonbeneficiaries. This is given by the difference
their eligible population.
in-difference estimator for each municipality as follows:
The validity of this identification strategy relies on the
assumption that conditional on Sijt =individual fixed
otij + JjToo + QjBjjToo effects,
+ jiijn fort = 1999,2000,
the trend in future dropout behavior of beneficiaries and non
beneficiaries would be the same in the absence of the Bolsa
(4)
Escola program. Given that the process of selection of bene
where By represents the status of future beneficiary and 7oo
ficiaries was done only once at the onset of the program in
is a dummy variable for the year 2000. This allows us not
2001, the concern is not that beneficiaries could be brought
only to test for differential trends in preprogram dropout
into the program in response to unanticipated shocks afterbehavior between beneficiaries and nonbeneficiaries, but
the program had started. The main concern is that the selec
also to test whether the program effects are different when
tion decision was based on preprogram schooling outcomes. we restrict the estimation sample to municipalities without
To address this concern, we include in Xyt differential
differential preprogram trends. Thus, our final specification
time effects by preprogram dropout histories S,j0, whichestimates
are the program effects conditional on child fixed
the best^ predictors of future dropout behavior. The estima
effects, and differential time effects by preprogram dropout
tion of 0, can be obtained by rewriting equation (1) as histories, and for the subset of municipalities where prepro
gram trends in dropout behavior were not different between
Sijt = 4>y + Py; + JjtSijO + 9/ + 0/ (SijO ~ Sfi) Piji + Hyf,
beneficiaries and nonbeneficiaries.
(3)
VI. The Impact of Bosla Escola on Dropout Rates
where \iijt = (% - 0, - 0* (Sij0 - Sj0))PiJt + sijt, 0* =
E(Qij\Bjj = 1, Sijo = l) — E(Qij\Bjj — 1, Sijo = 0), Sjo = In this section, we first report the estimation of the aver
E(sij0\Bij = 1), and % and jjtS,jo denote different sets of age impact over all municipalities in the sample. The esti
year effects. mated impact is robust to various empirical specifications
The estimator is consistent if E ((0,y — 0y — 0* and robustness checks. We then report the variation in pro
gram impacts across municipalities.
(Sij0 ~ Sj0))Pijt + ey/|4>,y, P7v, YjtSijO,Pijt) = 0. The first term,
£((0y - Qj - 0* (Sij0 ~ Sjo^P^y, P/„ YjtSijo,Pijt), which
accounts for the difference between the child-specific effect A. Average Impact on Dropout Rates
and the common effect conditional on Syo, is null by con
struction. Hence the estimator for the TT effect is consistent
Table 3 presents regression results from estimating sev
eral variants to equation (3), where the dependent variable
if £(syr|<t>y, Pyf, jj,Sijo,Pijt) = 0. is a binary variable for whether the child drops out of
This specification thus provides an unbiased estimate of school during the school year as reported in the school
the TT effect when the selection of beneficiaries is based on
records. Column 1 presents an estimate of the treatment
an individual's fixed characteristics, time fixed effects specieffect that includes only year and individual child fixed
fic to the pretreatment dropout histories, or any other variable
effects. Under this specification, Bolsa Escola reduced
unrelated to school dropout behavior. In this specification,
dropout rates among beneficiary children by 5.7 percentage
the average impact of the program on the selected children of
15 This will control for any reversion to the mean if selection was based
on the dropout status. Note that in this case, where beneficiaries have
14 There is no distinction between participating in the program and
much lower dropout rates than nonbeneficiaries, a reversion to the mean
being offered the program because take-up rates are 100%. would suggest that we were underestimating the program's impact.

152.118.24.31 on Mon, 28 Sep 2020 05:01:51 UTC
Table 3.—Average Impact of Bolsa Escola on Dropout Rates
Dependent Variable: Dropout (1/0) (1) (2) (3) (4) (5) (6) (7)
Treatment effect -0.057 -0.080 -0.085 -0.085 -0.096 -0.074 -0.092
[0.003]*** [0.004]*** [0.004]*** [0.005]*** [0.004]*** [0.008]*** [0.016]***
Year fixed effects Yes Yes Yes Yes Yes Yes Yes
Child fixed effects Yes Yes Yes Yes Yes Yes Yes
Dropout Status in 2000 x Year Effects No Yes Yes NA NA NA NA
Dropout Status in 1999 x Year Effects No No Yes NA NA NA NA
Dropout History x Year Effects No No No Yes NA Yes Yes
Mean of dependent variable 0.137 0.116 0.116 0.116 0.116 0.114 0.150
Number of children 290,517 118,234 118,234 118,234 118,234 78,737 16,437
Observations 604,561 344,107 344,107 344,107 344,107 229,720 33,308
R2 0.72 0.69 0.73 0.73 NA 0.68 0.77
This table reports the effects of Bolsa Escola on dropout rates. The sample in columns 2 to 5 is restricted to children enrolled in school in 1999 and 2000. Samples in columns 6 and 7 correspond to municipalities
where differences in preprogram dropout trends for beneficiaries and nonbeneficiaries were not statistically different (in column 6) and greater than 0 (in column 7). Robust standard errors clustered at the municipal
ity level in brackets. Significant at *10%, **5%, ***1%.
points. But a causal interpretation of this estimate assumesFigure 1.—Frequency Distribution and T-Statistics of Estimated Impacts of
Bolsa Escola on Dropout Rates by Municipality
that program beneficiaries were not selected based on pre
program dropout behavior.
In columns 2 to 5, we relax this assumption by extending
the fixed-effects model to allow for children with different
pretreatment dropout status to experience different year
effects (equation [3] above). In column 2, the model allows
different year effects based on dropout status in 2000 (the
year before the program started), whereas the model pre
sented in column 3 allows time effects to vary with both
child 1999 and 2000 dropout status. Column 4 presents a
model that allows separate time effects for each of the four
possible combinations of dropout histories in 1999 and
2000. Column 5 presents the most flexible specification.
Here we estimate the model presented in column 1 sepa
rately for each of the four dropout histories and compute the
overall treatment effect by weighting the results for each Each
of circle represents the impact for one municipality, with the point estimate on the horizontal a
the individual dropout histories by the sample fractions. and the absolute value of the associated r-statistic on the vertical axis. The horizontal line at / = 1.96
delineates the 5% significance level. The frequency distribution is of the impact point estimates in the
Overall, the estimates suggest that Bolsa Escola reduced
sample of municipalities.
dropout rates by around 8 percentage points for its selected

beneficiaries. The point estimates are highly statistically
effect on the subsample of 16,564 children enrolled in all
significant and change little across the various specifica
five years. Note that this sample has a different age struc
tions. The results imply that if it were not for the program,
ture from the population at large, with no older children in
we would have observed a dropout rate of 12% insteadthe of earlier years and no young children in the later years.
the 4% observed among beneficiaries in 2001 to 2003. The However, the results (not reported in the table) are quite
program thus induced a substantial 66% decline in dropout.similar, with an estimated TT effect of —5.6 percentage
Columns 6 and 7 present further robustness checks by points in spite of a very different population sample.
restricting the sample to municipalities where preprogram
trends verify the assumption underlying the identification.
B. Estimation of Municipal-Level Impacts on Dropout Rates
In column 6, the estimation is performed on the 194 munici
palities where the preprogram differences in change in The Bolsa Escola program reduced dropout rates by 8
dropout rates between (future) beneficiaries and nonbenefi percentage points on average. Program impact varies, how
ciaries are not significantly different. In column 7, we ever, considerably across municipalities. Our survey design
allows to estimate an impact 0, of the program for each
restrict the sample to the 111 municipalities where benefici
aries had a higher increase in dropout rates than nonbenefimunicipality j. Figure 1 presents the frequency distribution
ciaries in the preprogram period. In both cases, the esti of these program impacts 9/ on dropout rates, using the
mated impact on beneficiaries is basically the same as wheneconometric specification presented in column 2 of table 3
estimated on the whole sample in columns 2 to 5. for each of the 261 municipalities. The distribution of
To further verify that the program's impact is not con impacts is skewed toward negative values, with a median
impact of —6.7 percentage points. While the estimated
founded with possible differential quitting rates for benefi
ciaries and nonbeneficiaries, we estimated the treatmentimpacts range from —25.5 to 10.7 percentage points, over

152.118.24.31 on Mon, 28 Sep 2020 05:01:51 UTC
95% are negative. In addition to the distribution ofy2

Yi and unbiased
are negative, (3 > P*, where p is the first-term
estimates of impact, figure 1 plots the absolute values
effect of the
on performance without controlling for ability and
corresponding ?-statistics. Each circle represents the
experience. Notesti
controlling (or controlling incompletely)
mated impact for one municipality, with thefor
point estimate
ability and experience would thus yield an upward bias.
reported on the horizontal axis and its corresponding t of the first term on the decline in drop
The favorable effect
out rate would
statistic on the vertical axis. Few positive impacts arebe mea
underestimated.
sured precisely.16 Over 55% of the estimates Theseare signifi
biases may not be of concern in identifying the role
cantly negative at the 5% level and 65% atof the 10% incentives
electoral level. on performance as they affect perfor
Given the substantial variation in program performance
mance in the opposite direction. However, to account for
across municipalities, a natural question tothese
ask potential
is to what biases, we follow Ferraz and Finan (2011)
extent electoral incentives affect program andperformance
employ two strategies. First, we compare second-term
across municipalities. mayors to the set of first-term mayors who were reelected in
the subsequent election. If the bias from the OLS regression
comes from unobserved political ability that positively
VII. Impact of Electoral Incentives on Municipal
selects more able politicians into a second term, this approach
Program Performance controls for a significant portion of this bias by comparing
mayors who are as politically able as second-term mayors.
In this section, we provide evidence consistent with the
Second, in comparing first- and second-term mayors, we can
ory that the program performed better in municipalities
account for the effects of political experience by restricting
where mayors faced reelection incentives. To estimate these
the sample to first-term mayors who have had at least two
effects of electoral accountability, we compare the pro
terms of political experience in another office.
gram's impact on dropout rates in municipalities where the
There is another confounding factor for which we cannot
mayor happened to be serving in his first term (and hence
control, but it would again increase second-term perfor
could be reelected) to those where the mayor happened to
mance, running opposite to our electoral incentives model.
be serving in his second (and thus final) term at the time the
Mayors may control other resources that they can use to
program was introduced. Although the difference in pro
compensate qualifying households that did not receive a
gram impacts between first- and second-term mayors will
Bolsa Escola stipend in a way that induces them to stay at
capture the effects of reelection incentives, as we discussed
school. This would lower the estimated impact of Bolsa
in section II, it is potentially confounded by at least two fac
Escola on dropout. If first-term mayors are more likely to
tors. First, given that second-term mayors are a selected
compensate nonbeneficiaries because of reelection incen
group, it is likely that they are more politically able than
tives, we would be underestimating the impact of electoral
first-term mayors. If political ability is positively correlated
incentives on performance.
with program performance, then the simple difference will
Table 4 presents regression results from estimating sev
be biased upward, meaning that we will underestimate the
eral specifications based on equation 5, and where the sam
reduction in dropout rate.17 Second, second-term mayors by
ple is restricted to the set of municipalities for which we
construction have more consecutive years of experience in
have a full set of covariates.18 The dependent variable in
office than those in their first term. Without controlling for
each regression is the program's impact on dropout rate for
these potential differences in experience, estimates will
a particular municipality, which we estimated based on the
again be upwardly biased. To see this more explicitly, con
model presented in equation 3.19 Column 1 reports the unad
sider the following regression model:
0y- = a + P *Rj + Xj8 + y x Abilityj + y2 Experience] + Ej,

18 We purposefully chose to first estimate the program impacts at the
(5) municipality level and then estimate the impact of mayors' electoral sta
tus on these impacts, because this is what best corresponds to the fact that
municipalities are independent of each other in their management of the
where Rj is a dummy variable equal to 1 if the mayor is in program. The alternative of a joint estimation over all municipalities, such
his first term, the Xj are municipal and mayor characteris as Sijt = <(>y + (0i + 0iRj)Pijt + implies assuming a distribution for
tics, and P* is expected to be negative if first-term mayors 1that is common to all ijt observations, which is not the same as assum
obtain a higher reduction in dropout. Thus, assuming that ing one distribution per municipality in the model Sy, = (j>„ + 0jPy, + \ii]r
Although the OLS estimators of these two models need not yield the
same estimates, as they verify S = <j) + 0iP + 02RP and S = 4>+
16 As can be seen in figure 1, only one positive impact is significantly
different from 0 at the 10% level; the rest have an average ^-statistic of ^0i + 02 R\Pj, respectively, our results are similar using either approach.
0.80. Moreover, because this two-step estimator will induce heteroskedasticity
17 This assumes that elections create a positive selection on high-ability in the second-stage estimation, we allow an arbitrary form of heteroske
mayors. If elections select the most populist candidates and populism was dasticity in computing our standard errors (Hanushek, 1974).
negatively correlated with ability then second-term mayors would be on 19 Specifically, we estimate the program's impact separately for each
average less able than first-term mayors. In this case, we would be overesmunicipality, controlling for time and child fixed effects and the child's
timating the effects of reelection incentives on program performance. 1999 and 2000 dropout status interacted with time dummies. The average
While this is a possibility, the results that we present in both this section impact of the program using this specification, which is more flexible than
and the following one are inconsistent with this assumption. those presented in table 3, and for this sample of municipalities is —0.067.

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Table 4.—Effects of Electoral Incentives on Program Performance
(1)
Dependent Variable: Program's Impact on Dropout Rate (2) (3) (4) (5) (6)
Mayor in first term -0.020 -0.022 -0.021 -0.026 -0.018 -0.020

[0.008]** [0.007]*** [0.007]*** [0.009]*** [0.010]* [0.007]***
Governance practices
Mayor's spouse is a politician 0.018
[0.010]*
Share of public employees related to the mayor 0.178
[0.062]***
Share of secretariat that are politicians (versus technicians) 0.020
[0.012]
Municipal characteristics No Yes Yes Yes Yes Yes
Mayor characteristics No Yes Yes Yes Yes Yes
Other municipal characteristics No No Yes Yes Yes Yes
State fixed effects No Yes Yes Yes Yes Yes
Mean of dependent variable -0.067 -0.067 -0.067 -0.067 -0.064 -0.067
Observations 236 236 236 193 176 236
R2 0.03 0.27 0.31 0.38 0.32 0.34
This table reports the effects of reelection incentives on program performance. Robust standard errors in brackets. Significant at *10%, **5%, Mayor characteristics include gender, education, number of
terms held in a political position, age, and party affiliation dummies. Municipal characteristics include population density (pop/km), number of districts, percentage rural, percentage literate population, log per capita
income, margin of victory in the previous election, and Gini coefficient. Other municipal characteristics include existence of an NGO, share of children benefited by the program, municipality is a judiciary district,
existence of a social council, received training, number of radios, number of newspapers, public sector employment (as share of population), total number of employees in the mayor's office, and total number of
secretariats. The sample in column 4 is restricted to second-term mayors and first-term mayors who will be reelected in 2004. The sample in column 5 is restricted to second-term mayors and first-term mayors with
at least two terms of political experience in another office.
justed relationship between program impact and whether the trol for political experience in column 2 (and find that the
mayor happens to be in his first term, which shows a 2 per estimates are robust), this comparison excludes first-term
centage points gain in reducing dropout. Columns 2 and 3mayors, who have less political experience than second
include additional sets of controls. In column 2, we accountterm mayors. The results are consistent with the previous
for differences in municipal and mayor characteristics and specifications.
introduce state fixed effects. Column 3 includes other muni Column 6 in table 4 introduces governance practices that
cipal characteristics that, although endogenously deter are correlated with program impact. The program performs
mined, might proxy for some unobserved determinantsworse of in municipalities with higher levels of nepotism or
program performance. As seen across both columns, the cronyism, as measured by whether the mayor's spouse is
also a politician, the share of employees in the mayor's
inclusion of these additional controls has virtually no effect
on the original estimate. For instance, under the most flex office who are related to the mayor, and the share of secre
ible specification (column 3), the point estimate is —0.021 tariat members who are politicians rather than technicians
which is statistically significant at the 1% level. This stabi
(positive but not significant). Although these governance
lity of the parameter to the addition of many mayor practices and are slightly more common among second-term
municipal characteristics gives confidence that the estimatedmayors (see table 2), we find that even after accounting for
effect is likely not due to omitted variable bias. At an averthese symptomatic features of bad governance, the effects
age impact of —6.7 percentage points across all municipali of reelection incentives remain unaltered.
ties, with —7.9 percentage points in municipalities with As an additional test of robustness, we also compare first
first-term mayors and —5.9 percentage points in municipali term mayors to the set of second-term mayors who became
ties with second-term mayors, this 2.1 percentage point gain candidates in the subsequent 2006 and 2008 elections.20 If
in program performance corresponds to a 36% better perfor reelection incentives explain the difference in program per
mance for first-term mayors. formance between first- and second-term mayors, then we
In columns 4 and 5, we examine the extent to which poli also would expect second-term mayors who were anticipat
tical ability and experience may be biasing our results. ing Col running for other political offices to behave similar to
umn 4 reports the results from the comparison of first-term first-term mayors. Although we do not have a measure of a
mayors who were reelected in the subsequent 2004 elec mayor's ex ante desire to run for other political offices, we
tions to the subset of second-term mayors. Using this sam do find that second-term mayors who did run for other poli
ple of mayors, we find that reelection incentives improve tical offices (ex post) had similar program performances to
program performance by 2.6 percentage points, whichthose is of first-term mayors. For instance, conditional on run
statistically similar to our base specification. To account for
ning in the 2006 and 2008 elections, the difference between
any potential differences in experience between first- and
second-term mayors, we compare in column 5 the subset of
first-term mayors who have had at least two terms of politi 20 Ten percent of mayors in our sample ran in the 2006 elections for
state and federal deputies, senators, and governors. Twenty-five percent
cal experience as either a local legislator or a state or fedof the mayors were candidates in the 2008 elections for mayor and local
eral congressman to second-term mayors. Although we councilmen.
con

152.118.24.31 on Mon, 28 Sep 2020 05:01:51 UTC
Figure 2.—Reelection Rates by Program Impact, 2004

We verify this result in a regression framework
The electorate may have difficulty recognizing
program performance (as can be seen from the
cant coefficients in columns 1 and 2) unless perf
outstanding. This would be the case for the to
mayors with the largest program impacts (colu
4). We see that these incumbent mayors have a 2
chance of being reelected. The electorate can als
the program was administered, in particular wh
dren who did not qualify were included (type 2
The results in columns 5 and 6 show that mayo
public denouncements of inclusion errors h
higher chance of reelection. When put together
7 and 8, these results are robust. We can thus conc
reelection is associated with good performance in
Program Impacts Bolsa Escola in accordance with federal prog
tives, likely symptomatic of good performance
The plot presents the proportion of first-term mayors who were reelected in 2004 for a bin size of 0.01
public functions as well. The electorate thus app

impact (circles), along with a locally weighted regression calculated with a bandwidth of 0.8. Municipa
lities to the left of the vertical line were in the top 25% in terms of program impact.
informed about program performance and concern
in casting their votes in local elections.
first-term and second-second mayors is only —0.003 (com

pared to —0.020 in our main specification). Although this
B. What
result should be interpreted with caution given Do pro
that the First-Term Mayors Do to Achieve Hi
Performance?
gram's impact may also have induced some second-term
mayors to run for office, it provides further evidence consis
Mayors have considerable leeway in choosing t
tent with a reelection incentive interpretation.
tional setup to implement the Bolsa Escola pro
there are large variations in practices across mu
VIII. Interpreting the Results Some of these practices are clearly associated w
and worse program performance. The question
In interpreting the results, two issues need the
to be verified.
positive correlates of performance are more
The first is that there are indeed electoral with
rewards to than
first- good second-term mayors and, corresp
program performance, suggesting that the theelectorate is
negative correlates less prevalent.
informed about performance and cares about it in casting
Many of the municipal practices associated wit
their votes. The second is to explore what first-term
programmayors
impact have to do with greater transpare
do to achieve higher performance. gram implementation. As can be seen in panel A
this includes registering beneficiaries in schools
to less neutral sites such as the mayor's off
A. Electoral Rewards to Good Program Performance
involves verifying the information parents give ab
The results thus far correspond to a simple self-declared
model of poli poverty status. And it implies ha
councils
tical agency. It requires that voters are informed composed
of and care of citizens and public officia
about the program's impact and that mayors witheffectively deliberate implementation procedu
reelection
incentives exert effort on program delivery thesein practices
order to bear positively on program per
increase their chances of reelection. A prediction
reducing of thethis
dropout rate. In terms of enforcemen
model is that first-term mayors are more likely
gram to be
rules, the practice associated with lower drop
reelected in municipalities where the program performed
involves not sending a program coordinator to
household
better. Clearly, reelection responds to the quality when conditionalities are not met as
of perfor
mance in a broader set of public functions, which
strict are pre
application of rules. Panel B of table 6 s
sumably correlated with effective management these favorable
of the Bolsa practices in program implement
Escola program (Ferraz & Finan, 2008). as a deliberative social council) are used more f
Figure 2 shows a nonparametric estimate by first-term
of the uncondi mayors, and unfavorable practi
tional relationship between program impact and probability
of reelection among incumbent mayors in the 21
2004
Ourelection.
measure of public denouncement is an indicator f
member of the community had complained to the secretary
It indicates a clear upward trend for mayors who have
that a household above the income threshold is benefiting
achieved a program impact below —0.09, which gram.corresponds
Fifty-eight percent of the municipalities in our samp
to the top 25% in the distribution of programa complaint.
impacts.

152.118.24.31 on Mon, 28 Sep 2020 05:01:51 UTC
Table 5.—Electoral Rewards and Program Performance
(1)
Dependent Variable: Mayor Was Reelected in 2004 (2) (3) (4) (5) (6) (7) (8)
Program impact -1.251 -1.227

[0.866] [1.296]
In top 25% of program impacts (0/1) 0.234 0.282 0.249 0.248
[0.108]** [0.142]* [0.107]** [0.145]*
No public denouncement of type 2 (inclusion) errors 0.172 0.261 0.191 0.224
[0.106] [0.131]* [0.103]* [0.129]*
Municipal characteristics No Yes No Yes No Yes No Yes
Mayor characteristics No Yes No Yes No Yes No Yes
State fixed effects No Yes No Yes No Yes No Yes
Observations 98 98 98 98 98 98 98 98
R2 0.02 0.3 0.05 0.33 0.03 0.33 0.09 0.36
This table reports the effects of program performance on reelection outcomes. Observations are for the municipalities with an incumbent mayor in the 2004 elections. Robust standard errors are in brackets. Signifi
cant at *10%, **5%; ***\%. Municipal and mayor characteristics as defined in table 4.
Table 6.—Electoral Incentives, Program Implementation, and Program Performance
(i) (2) (3) (4)

Dependent Variable: Program Performance
A: Program implementation and Performance

Registered beneficiaries in schools -0.027
[0.012]**
Verified information given by parents -0.015
[0.007]*
Proportion of social councils that are deliberative -0.017
[0.009]*
Received visit from program coordinator when 0.017
conditionalities were not met [0.008]**
R2 0.31 0.30 0.30 0.30
Registered Proportion of Received Visit

Beneficiaries Verified Social Councils from Program
Dependent variable: in Schools Information That Are Deliberative Coordinator
B: Electoral Incentives and Program Implementation

Mayor in first term 0.041 -0.020 0.139 -0.199
[0.050] [0.071] [0.057]** [0.072]***
Mean of dependent variable 0.849 0.638 0.645 0.441
R2 0.19 0.19 0.14 0.22
Control for both panel estimations
Municipal characteristics Yes Yes Yes Yes
Mayor characteristics Yes Yes Yes Yes
Other municipal characteristics Yes Yes Yes Yes
State fixed effects Yes Yes Yes Yes
Observations 232 235 236 236
Panel A reports associations between program implementation methods and program performance. Panel B reports the effects of reelection incentives on choice of program implementation method. Robust st
dard errors are in brackets. Significant at *10%, **5%; ***1%. Municipal and mayor characteristics as defined in table 4.
nator visits) less frequently, suggesting the channels

table for program performance, thereby creating an
tive for politicians with reelection concerns to inc
through which first-term gains in performance occur.
effort in achieving high program performance. Th
IX. Conclusion Escola experience is thus symptomatic of a broad t
toward increasing decentralization in the provision o
Bolsa Escola, subsequently incorporated in thepublic goods. Because the program was introduced e
current
Bolsa Familia, was a decentralized conditional cash
ouslytransfer
relative to whether the local mayor was in his fi
program aimed at reducing school dropout rates terminal
among thesecond term, it provides a rare opportun
understand
children of the poor in Brazil, with municipal authorities in empirically how local electoral ince
offered by reelection can affect decentralized progr
charge of program implementation. The federal government
sought to achieve higher program performance formance.
by entrust
We find
ing local politicians with the selection of beneficiaries andthat while Bolsa Escola had a strong o
the enforcement of rules. The expectation is thatimpact on beneficiary school attendance, reducing d
this gives
rates by and
politicians the opportunity of using local information 8 percentage points, municipalities gover
citizens the opportunity of holding local politicians accoun reelection incentives fared much bette
mayors with

152.118.24.:ffff:ffff:ffff on Thu, 01 Jan 1976 12:34:56 UTC
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LOCAL ELECTORAL INCENTIVES AND DECENTRALIZED PROGRAM PERFORMANCE

Author(s): Alain de Janvry, Frederico Finan and Elisabeth Sadoulet

Stable URL: https://www.jstor.org/stable/23261471

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Alain de Janvry, Frederico Finan, and Elisabeth Sadoulet*

Abstract—This paper analyzes how electoral incentivesnowaffected

The Review of Economics and Statistics, August 2012,94(3): 672-685

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model where incumbents who are willing ato powerful instrument

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From the perspective of the program

whether to reelect the incumbent. If the incumbent is reelected, | a<p(a)da — a

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order to garner support from this group (Besley

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Table 1.—Summary Statistics on Dropout Rates

Proportion of Dropout Rates Difference-in-Differences Difference-in-Differences

1999 0.182 0.020 0.058

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and key members

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Table 2.—Summary Statistics of Mayors and Municipalities

First-Term Second-Term P-Value of

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ing year fixed effects, and Py, is an indicator afor

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Table 3.—Average Impact of Bolsa Escola on Dropout Rates

dropout rates by around 8 percentage points for its selected

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95% are negative. In addition to the distribution ofy2

0y- = a + P *Rj + Xj8 + y x Abilityj + y2 Experience] + Ej,

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Table 4.—Effects of Electoral Incentives on Program Performance

Mayor in first term -0.020 -0.022 -0.021 -0.026 -0.018 -0.020

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Figure 2.—Reelection Rates by Program Impact, 2004

public functions as well. The electorate thus app

first-term and second-second mayors is only —0.003 (com

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Table 5.—Electoral Rewards and Program Performance

Program impact -1.251 -1.227

Table 6.—Electoral Incentives, Program Implementation, and Program Performance

(i) (2) (3) (4)

A: Program implementation and Performance

Registered Proportion of Received Visit

B: Electoral Incentives and Program Implementation

nator visits) less frequently, suggesting the channels

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