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Effect of central transfers on municipalities' own revenue mobilization: Do conflict and local revenue management matter?

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Abstract

This paper analyzes the effect of the transfers from central government to municipalities on the revenue mobilization by municipalities in Côte d’Ivoire over the period 2001-2014. The analysis is based on a new carefully-constructed dataset covering the conflict and post conflict periods for 115 municipalities. A two-stage least squares estimator is combined with the Grouped Fixed Effects estimator to address a potential endogeneity bias and to allow for unobserved heterogeneity varying over time. The results show a statistically significant and positive effect of central transfers on revenue mobilization by municipalities for both tax revenue and non-tax revenue. The effect of transfers is found to be higher for tax revenue than for non-tax revenue. The conflict eroded the capacity of municipalities to raise revenue. During the conflict, a 10 percent increase in transfers is associated with a 3.3 percent increase in revenue mobilized by municipalities, while this increase reaches 5.9 percent after the conflict.
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Dates and versions

halshs-01613108 , version 1 (09-10-2017)

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  • HAL Id : halshs-01613108 , version 1

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Jean-François Brun, Tiangboho Sanogo. Effect of central transfers on municipalities' own revenue mobilization: Do conflict and local revenue management matter?. 2017. ⟨halshs-01613108⟩
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