Weekly Economics Seminar by Deepak Singhania
October 31, 2018 @ 1:30 pm - 2:40 pm
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Title: When does local government proliferation work? Role of direct local elections in Indonesia
Speaker: Deepak Singhania, Evidence for Policy Design
Abstract: Standard theoretical arguments in favor of local government (LG) proliferation are: (a) it reduces the distance between citizens and LGs facilitating customized governance, and (b) it increases the accountability of LGs to their citizens. There are a few empirical studies that examine these theories independently, but none that assess their complementarities. This paper exploits the plausibly exogenous timing of splitting of Indonesian districts and an abrupt first-time direct elections of district heads. By design, these reforms overlapped for some, but not for all districts, resulting in an identification of four groups: those with only elections, those with only split, those with both, and those with none. Using an Indonesian panel of village level outcomes, I find that the quantity of publicly provided goods were significantly higher in the districts that encountered both elections and split. This implies that reducing citizen-LG distance as well as increasing accountability both have a role in public policies. I also provide suggestive evidence to show that increased revenue was channeled into developmental expenditures only in those split districts that also faced direct elections.