We investigate in this paper the impact of Federal Deputies’ and Senators’ discretionary transfers through amendments to the Annual Budgetary Law on several indicators of the quality of life, poverty and inequality in Brazilian municipalities from 1998 to 2010. This is a first attempt to investigate the role of the Legislative Branch in fighting poverty and inequality through targeted transfers, usually seen in a derogative form as pork barrel politics. Here we treat such actions as policies and assess their distributional biases and impact on beneficiaries using up-to-date policy evaluation techniques.
The dataset contains over 60,000 observations on all 5500+ Brazilian municipalities for over a decade. We employ matching and longitudinal data analysis techniques and treat budgetary amendments as exogenous shocks, mapping how it reverberates on social indicators on succeeding years.
Results indicate a positive effect of such policies in reducing inequality and alleviating poverty.
