2019/10/11 by Julia A. Payson, Julia Payson · 3 citations
Social Sciences · Economics, Econometrics and Finance · #Local Government Finance and Decentralization #Fiscal Policies and Political Economy #Fiscal Policy and Economic Growth
paper · doi:10.1086/706767
What happens when local governments hire lobbyists? Although intergovernmental lobbying is common in the United States and other federal systems, we know little about its consequences. Using newly compiled data on state-level lobbying across the country, I establish a positive correlation between city lobbying and state funding. I then introduce over a decade of panel data on municipal lobbying in California to estimate the returns to lobbying for cities with a difference-in-differences design. I show that lobbying increases state transfers to cities by around 8%. But the benefits of intergovernmental lobbying are not equally distributed. I find that cities with higher levels of own-source revenue per capita net more state money when they hire lobbyists, despite enjoying a local revenue advantage. These results offer some of the first empirical evidence that city officials can influence state spending by lobbying—but this behavior may also perpetuate local economic inequality.