Browsing by Author "Tähtinen, Tuuli"

This master's thesis studies intergovernmental transfers from central to regional level in the Russian Federation. Although the reasoning federal grants is based redistribution and equity issues, there is a considerable amount of empirical evidence from different countries that transfers are often in part politically motivated. This thesis attempts to estimate the causal effect of the Russian regions’ political representation in the State Duma on the distribution of intergovernmental transfers. Questions of interest are whether malapportionment, parties’ and legislators’ electoral incentives, home town bias, or party affiliation affect the pattern of transfers. The theoretical background of this study consists of models about electoral competition and legislative bargaining. According to the models of electoral competition, parties target spending to either support or swing voters in order to maximize their votes and win elections. The model of legislative bargaining predicts that unequal representation can lead to unequal influence in the legislature and therefore to unequal distribution of public spending. The thesis uses panel data from the Russian regions that covers the years 2008-2013. To control for heterogeneity between the regions, the thesis employs fixed effects regression model. The robustness of the results is also tested using a generalized method of moments estimation. The results show that regions that produce large pro-incumbent vote shares are rewarded with additional transfers. This supports the Cox-McCubbins model’s prediction that parties allocate spending to their core districts. In addition, the results suggest that more representation per capita is associated with higher per capita transfers. The impact of legislators incentives and party affiliation on transfers is ambiguous.