Are newcomers financially responsible? Evidence from close elections in Brazilian Municipalities

ABSTRACT

This paper examines how mayors’ political experience impacts fiscal outcomes. Using a regression discontinuity design in highly-contested elections in Brazilian municipalities, we estimate the differences in fiscal performance between newcomers and veteran politicians. We find that municipalities governed by mayors who never won an election before experience a worse budget balance and a substantial increase in public investments. This difference appears to be driven by differences in candidates’ experience rather than by factors such as re-election concern, ideology, vertical partisan alignment, gender and political party turnover.

KEYWORDS:

• Experience
• municipal elections
• regression discontinuity design
• local government budget
• mayors

Acknowledgement

We thank George Avelino Filho, Raphael Corbi, Renata Narita, Thomas Fujiwara, and conference and seminar participants at 47th Annual ANPEC Congress (São Paulo, December 2019) and 26th Annual LACEA Meeting (hosted virtually, October 2021) for comments and suggestions. The authors also thank Capes and Fapesp for financial support. All errors are our own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. To name a few, o genre (e.g., Chattopadhyay and Duflo 2004; Brollo and Troiano 2016; Avellaneda, Bello-Gomez, and Corrêa Gomes 2022), race (Alesina, Baqir, and Easterly 1999; Nye, Rainer, and Stratmann 2015; Brian and Jones 2017), religion (Meyersson 2014), age (Avellaneda and Corrêa Gomes 2015; Alesina, Cassidy, and Troiano 2019), professional background (e.g., Brian and Jones 2016; Hyytinen et al. 2018) and socioeconomic background (Hayo and Neumeier 2014).

2. Senators’ mandates are actually eight years. However, Senate elections take place every four years, renewing one third and two thirds of the House with each alternate election.

3. Data for the 1994 to 2002 are incomplete on the TSE website. Despite this limitation, the best data available were used.

4. If the candidate had his registration rejected before the election, we consider it as if he did not participate.

5. Available at: https://dadosabertos.tse.jus.br/– accessed on 21/01/2023.

6. This was due to the fact that one of the limitations of the electoral database is the lack of information about an elected candidate completing their mandate. In other words, it was assumed that the mayor elected in 2008 remained in office until they completed their term in 2012.

7. Other professionals such as administrators, bankers, merchants, students, journalists, police, religious, to name a few, are added to the category.

8. The political parties that elected the most mayors in our sample are the MDB (20.4%), PSDB (13.8%), PT (Partido dos Trabalhadores, 9.3%), PP (Partido Progressista, 9%) e DEM (Democratas, 8%).

9. We define small parties to be all other 23 parties that are in our sample.

10. If we restrict the test of means to veterans who are not incumbent mayors, the statistical difference disappears.

11. Restricting the sample to non-incumbent veterans, this difference drops to just 5.1 p.p., but remains statistically significant.

12. An example is Renildo Calheiros, a member of a traditional family of politicians, elected mayor of the municipality of Olinda in 2012 and who had already been elected federal deputy twice.

13. See Figure A1.

14. A formal test to verify the continuity of the attribution variable was developed by McCrary (2008), and perfected later on by Cattaneo, Jansson, and Xinwei (2018). It aimed at verifying if the density of the random variable xi, f (x) is continuous at the cut-off point x, by using two subsamples {xi : xi≤ x} and {xi : xi > x}, with the null hypothesis H0:f(x) = f(x).

15. In Appendix Table A2, we look at the composition of expenditures across main functions of government (administrative, social, health, education, urban and others), and we find no evidence that the newcomer mayors promote any reallocation in municipal expenditures by function.

16. Results reported in Appendix Table A3 verify the impact of novice mayors on budget categories in per capita values. The results show the robustness of the results in Table 7, showing that newcomers significantly increase public investments (an increase of almost 25% in relation to the control group), with no significant impact on current expenditures.

17. In order to isolate the age differential between newcomers and incumbents (and non-incumbents), we restrict the age to more than 38 (and 31) years. Figures A6 and A7 in the Appendix show the t-Test for difference in age means between the samples.

18. Additionally, although the estimates reported in columns 2 and 3 of Appendix Table A3 point out that newcomers worsen the budget balance as a share of the local budget when compared with incumbent and non-incumbent, the point estimate in the comparison with the non-incumbent it is more than double, indicating that when controlling for the term-limit the worsening in the fiscal performance of the newcomer is even greater.

Additional information

Funding

Henrique Augusto Campos Fernandez Hott gratefully acknowledges financial support from Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES) – Finance Code 001 (process number 88882.333286/2019-01) and Fapesp - 2019/12553-0.