Local Economic Effects of Morales’ Legacy in Bolivia

• In Event: Lightning Round: Research in Five: Graduate Students I

Abstract

Left-wing governments are often associated with income redistribution through higher taxes and social spending. Evidence on the effect of partisanship on local redistribution in developing countries is mixed. This paper explores the impact of Bolivian mayors representing Movimiento al Socialismo (MAS), Evo Morales' party that governed Bolivia between 2006 until 2019. I test whether municipalities with MAS affiliated mayors show a higher reduction in inequality and increase in economic growth, relative to the opposition, during their governing period. The analysis contributes to the literature on redistributive policies implemented by local governments and its effects on local poverty and inequality reduction in developing countries. Based on the literature, I anticipate that MAS’ mayors fulfil voters’ demand for redistributive policies in congruence with the party’s ideology and show a higher reduction in inequality during their governing period. The analysis relies on satellite night light pixel data as a proxy for yearly economic growth and yearly change in inequality within municipalities. I use a close election discontinuity design for the three recent municipal elections. I find that MAS’ mayors have no significant impact on the metrics of inequality and economic growth I use. The findings have implications for local governance and responsiveness in developing country contexts.

Author

• Sina Smid, Copenhagen Business School