Essays on the Political Economy of Social Government Programs

This dissertation is an effort to deepen our understanding about how citizens assign credit for changes in their personal economic situation and how they evaluate political processes and outcomes when exposed to targeted government transfers. This dissertation consists of three chapters that study the electoral effects of social government programs and their impact on citizens' attitudes.The first chapter entitled "Local Electoral Rewards from Centralized Social Programs: Are Mayors Getting the Credit?" provides an empirical assessment of the extent to which local incumbents are rewarded for welfare programs under the control and operation of a central government. I use variation in the timing of the Mexican antipoverty program's introduction across municipalities to identify its impact on the share of votes for the local incumbent party. I find evidence that voters credit the Mayor's party from the benefit to their constituencies. The estimated effect is significantly positive accounting on average for 2.8 percentage points in the share of votes for the Mayor's party. The analysis of party alignment shows that this electoral effect cannot be explained as a reward for the federal incumbent in local elections. I examine alternative explanations and show that the effect for the local incumbent is heterogeneous for the different political parties and varies with characteristics of the municipalities, being stronger where the Mayor faced more contestable elections, in capital cities of the States and in predominantly urban, more educated and relatively wealthier municipalities. Findings are consistent with the hypothesis that politicians have incentives to engage in signaling strategies to link themselves to the transfer program.The second chapter entitled "Voters Response to Natural Disasters Aid: Quasi-Experimental Evidence from Drought Relief Payment in Mexico", joint with Alan Fuchs, estimates the effect of a government climatic contingency transfer allocated through the recently introduced rainfall indexed insurance on the 2006 Presidential election returns in Mexico. Using the discontinuity in payment based on rainfall accumulation measured on local weather stations that slightly deviate from a pre-established threshold, this work shows that voters reward the incumbent presidential party for delivering drought relief compensation. Results show that receiving indemnity payments lead to a significant increase in average electoral support for the incumbent party of approximately 7.6 percentage points. The analysis suggests that the incumbent party is rewarded by disaster aid recipients and punished by non-recipients. This chapter provides evidence that voters evaluate government actions and respond to disaster spending contributing to the literature on retrospective voting.The third and final chapter entitled "The Short-Run Effect of Social Transfer Programs on Citizen Attitudes: Evidence from PROGRESA-Oportunidades in Mexico" studies how individual perceptions and citizen attitudes are affected when the eligible population in the community benefits from government targeted transfers. Using panel data, I estimate a difference in difference model and explore the effect of enrollment of eligible population in the locality, as a proxy for individual exposure to targeted social policy, on levels of interest in politics, information and knowledge about political and public issues, perceptions about democracy and government, appreciation and practice of democratic values and community participation. Findings are consistent with the hypothesis that in the short run, targeted conditional transfers do not impact citizen attitudes reflecting normative preferences -for example, democratic values-- but do have an impact on judgments about whether political institutions and their processes meet citizens' expectations. Results suggest that social policy influences positively citizens' image about the government. Results also show an impact on community participation among the individuals in localities enrolled into PROGRESA-Oportunidades