Paper on Enfranchisement and Fiscal Policy accepted for publication in Economics of Governance

This paper studies the effect of political participation on public spending at the local level in Brazil. In particular, we look at the phased-in im- plementation of electronic voting in the late 1990s—which enfranchised poorer voters by decreasing the number of invalid votes—to identify the causal effect of political participation on public spending. We build a theoretical political economy model which allows voters to cast, not purposefully, an invalid vote, and show that when poorer voters’ likelihood of casting a valid vote increases, public social spending increases as well. We test this prediction empirically using a difference-in-differences model where municipalities using electronic voting constitute our treatment group. We find that an increase of 1 percent- age point in the valid vote to turnout ratio for state representatives increases health spending by 1.8%; education by 1.4%; public employment by 1.25%; intergovernmental transfers by 1%; and local taxes by 2.6%.

Keywords: Electronic voting · Political participation · Social public spending · Difference-in-differences

JEL Classification: H21, H4, H5, H7