Capital-Intensive Projects Induce More Effort than Labor-Intensive Projects

descriptionPublicationkeyboard_double_arrow_right Article , Other literature type , Preprint 01 Jan 2008 English Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

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Authors: Amihai Glazer; Stef Proost;

doi: 10.2139/ssrn.1323301

Capital-Intensive Projects Induce More Effort than Labor-Intensive Projects

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Abstract

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials. a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.

Related Organizations

University of California, Irvine
United States
KU Leuven
Belgium
Katholieke Universiteit Leuven
Belgium

Keywords

Federalism; Capital subsidies; Transit subsidies, jel: jel:L92, jel: jel:H71, jel: jel:H77

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