Clientelistic budget cycles: evidence from health policy in the Italian regions

Abstract:

Political budget cycles (PBCs), namely the manipulation of taxation or government spending close to elections, are an enduring topic in the study of economic policy-making. While the literature explains their occurrence based on information asymmetries between incumbents and voters, we argue that a source of variation in the extent of PBCs is, via the effect of clientelism, the level of economic development. In jurisdictions where voters have few economic opportunities outside those provided by the government, they will be highly dependent on the incumbents for their income. The latter can thus use clientelistic tools, such as their control over employment in the public sector, for electoral purposes. This argument is assessed with a study of health personnel spending in the Italian regions.