Conference Agenda

In this study, we examine the effect of yardstick competition on the level of public good provision under shared accountability, which is the co-financing of public goods by upper and lower governments. It is well known that partial expenditure decentralization, where different levels of government share costs, leads to the under-provision of public goods (Joanis (2014). This occurs because rent-maximizing politicians have a free-riding incentive (vertical political externality) to place the cost burden on the other level of government. We investigate whether the introduction of yardstick competition can mitigate this under-provision. Our analysis yields three key findings. First, yardstick competition alleviates the under-provision of public goods. Second, this positive effect is decreased by the distortion caused by the asymmetric vertical political externality. Third, when asymmetric vertical political externality exists and yardstick competition is sufficiently prevalent, the efficacy of yardstick competition is limited and suppressing vertical political externality is more effective.

To what extent do public goods, rather than just income differentials, drive the exit of human capital? We analyze the migration decisions of 1.25 million Italian expatriates to 32 countries across 5 continents between 2005-2024 using a discrete choice framework. We address the identification challenge by controlling for individual-specific predicted earnings, isolating the amenity channel. We find that destination amenities are a decisive determinant of location choice. Using willingness-to-pay analysis, we quantify these valuations: emigrants would sacrifice 7.6% of income for a one standard deviation improvement in educational quality at destination, and 3.0% for better environmental amenities. They would require 4.8% income premium to accept a one standard deviation increase in homicide rates, and 2.5% for higher PM2.5. These findings suggest that for migrants, the quality of public goods acts as a critical factor in the migration decision, offering policymakers a lever beyond wage subsidies to mitigate brain drain.

We study the crowding-in and crowding-out effects of EU Cohesion Policy, one of the largest public investment programs in the world, on investments in EU Member States. Leveraging a threshold that makes the poorer regions eligible for EU funding, we show that Cohesion funds crowd-out public investments. The retrieved fiscal resources are shifted towards current expenditures, rather than to other regions or periods. Although this crowding-out effect is a clear violation of EU’s additionality principle, we show that it is more than outweighed by substantial crowding-in of investments by the private sector. We estimate a multiplier of three euros per invested euro, most of it driven by non-tradable industries like construction. Our complementary difference-in-difference suggests that this effect persist over time. Further ongoing work relying on similar designs estimates GDP and employment multipliers of Cohesion of about one, which works primarily through the crowding-in channel of private investments.

Veteran-owned businesses receive preferential treatment in procurement by the U.S. Department of Veterans Affairs, the largest civilian federal agency by procurement spending. We study a 2016 Supreme Court ruling that expanded the scope of these set-asides and estimate its effects on targeted firms and procurement outcomes. The ruling increased the share of purchase order contracts awarded to service-disabled veteran-owned small businesses. Gains accrued both to incumbent vendors and to first-time VA contractors, including firms that had previously registered but had not won federal awards. The expansion also increased competition for awards, with no evidence of deterioration in contract execution performance. New VA vendors were no more likely to win awards from other federal agencies. The results suggest that, in commercial procurement markets with relatively low barriers to entry, set-asides can expand access for targeted firms without detectable deterioration in government procurement outcomes.