Does electoral competition curb party favoritism?

Abstract

We study whether incumbents facing uncontested elections channel public spending towards co-partisan officials more than is the case of incumbents that are worried about their chances of re-election. To do so, we draw on data detailing capital transfers allocated by Spanish regions to local governments during the period 1995-2007. Using a regression discontinuity design, we document strong and robust effects. We find that, on average, a mayor belonging to the same party as that of the regional president obtains nearly twice the amount in grants as is received by a mayor belonging to an opposition party. This effect is much greater for regional incumbents that won the previous election by a large margin, but it disappears in the case of highly competitive elections. The effects estimated by difference-in-differences are not so great but they point in the same direction. Overall, the results are consistent with predictions that regional incumbents focus on obtaining the most votes possible when elections are strongly contested, while they seek to increase the number of aligned mayors when their position at the ballot box is not vulnerable.