The Returns to Lobbying: Evidence from Local Governments in the "Age of Earmarks". (September 2019)

• Record Type: Journal Article
• Authors: Gordon, Steven
• Is Part Of: Public finance review. Volume 47:Number 5(2019:Sep.)
• Page Start: 893
• Page End: 924
• Publication Date: 2019-09
• Subjects: lobbying -- public finance -- earmarks -- political economy -- intergovernmental grants; Finance, Public -- Periodicals; 336.005
• DOI: 10.1177/1091142119852139
• Languages: English
• ISSNs: 1091-1421

Abstract

I measure the returns to lobbying for US local governments in terms of federal earmarks. Because a local government's decision to lobby may be endogenous to receiving an earmark, I instrument for lobbying with local housing prices. Since the time period of my analysis covers the Housing Crisis, I argue that the variation in housing prices over this time was largely exogenous to federal earmark distributions. The strong correlation that I find between housing price growth rates and lobbying provides evidence that local governments lobbied to buffer against impending property tax losses. I find no evidence that lobbying is associated with increased earmark awards overall. However, conditional on selection into receiving an earmark, I do find evidence that lobbying served to increase the size of earmark awards.