Mayoral quality and municipal performance in Brazilian local governments

Avellaneda, Claudia N.; Gomes, Ricardo Corrêa

doi:10.1590/1984-9240831

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Articles • Organ. Soc. 24 (83) • Oct-Dec 2017 • https://doi.org/10.1590/1984-9240831 copy

Mayoral quality and municipal performance in Brazilian local governments

Capacidade gerencial dos prefeitos e o desempenho de municípios brasileiros

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract

We test the influence of managerial quality on organizational performance using a panel data set on 827 (out of 853) Brazilian municipalities of the state of Minas Gerais over a six-year period (2005-2010). The intra-country and intra-state comparison controls for potential institutional, historical, and cultural variables. Local managerial quality is assessed in terms of mayoral education and experience (public and reelection), and municipal performance is operationalized as property tax collected per capita and property tax collected as a percentage of total revenue. The study covers the four years of the 2005-2008 mayoral administration and the first two years of the 2009-2012 administration. After testing the effect of political, economic, and ideological factors and controlling for other municipal factors, we find, contrary to our expectations, that mayoral quality fails to explain variance in property tax collection. Rather, political factors (legislature support and electoral cycle) seem to be more strongly correlated with municipal property tax collection. Specifically, municipalities in which the mayor enjoys more partisan support on the city council tend to collect more property tax. Moreover, compared to the first three years of mayoral administration, in the last year of mayoral administration – that is, during the mayoral election year – municipalities tend to reduce their property tax collection.

Keywords
Performance in public organizations; Mayors; Minas Gerais; IPTU

Group of inhabitants	N. ofmunicipalities	N. of municipalities in the region
Group of inhabitants	N. ofmunicipalities	North	North-East	Center-West	South-East	South
Up to 10,000	2,661	183	662	267	812	737
10,000-20,000	1,292	100	557	104	326	205
20,000-50,000	1,033	115	416	65	289	148
50,000-200,000	448	42	132	26	170	78
200,000-500,000	93	8	15	3	47	20
500,000 and more	35	2	12	2	17	2
Total	5,562	450	1794	467	1,661	1,190

Region	Population	% pop.	N. ofmunicipalities	GDP per head^* * Figures in Brazilian real.
North	14,623,316	8%	450	7,620
Northeast	51,534,406	28%	1,794	4,440
Southeast	77,873,120	42%	467	13,210
South	26,733,595	15%	1,661	13,000
Central	13,222,854	7%	1,190	11,260
Brazil	183,987,291	100%	5,562	9,910

Federal transfers		State transfers		Local revenue
• 22.5% of income tax • 25% of tax on industrial products (IPI) • 50% of rural property tax • 70% of tax on gold and financial operations (Gold/IPF)		• 25% of value-added tax (ICMS) • 50% of vehicle registration tax (IPVA)		• Service tax (ISS) • Urban property tax • Frontage tax • Property transfers (ITBI)

Variables	Mean	Std. Dev.	Min.	Max.
Dependent variable
Tax property collection/capita	12.72	21.05	0	319.39
Tax property as percentage of total revenue	0.95	1.37	0.00'	14.27
Support from above
Mayor-governor party alignment	0.42	0.49	0	1
President-mayor party alignment	0.13	0.33	0	1
Horizontal support
City council support (%)	2.51	1.329	0	100
Support from below
Margin of victory	17.58	19.01	0	100+
Socio-economic factors
Municipal GDP/capita*	8,477.55	10,333.7	1,428.88	239,773.6
Government ideology
Leftist government	0.19	0.39	0	1
Managerial quality
Mayor's education	5.03	1.97	1	7
Mayor's age	48	10	23	85
Mayor's public experience	0.23	0.42	0	1
Mayor's second term	0.27	0.45	0	1
Controls
Royalties	319,835	2.14e+06	0	4.99e+07
Number of properties	5299	11722	263	195786
Total grants	1.33e+07	2.94e+07	2.27e+06	8.43e+08
Total spending	823.62	672.91	1.93	5651
First administration year	.3	.46	0	1
Second administration year	.3	.46	0	1
Third administration year	.3	.46	0	1

	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19
PropertyTax Collection/cap	1
Tax Property/Total Revenues	0.87	1
Governor-Mayor Party Alignment	-0.04	-0.03	1
President-Mayor Party Alignment	0.08	0.04 -0.17		1
City Council Support	-0.06	-0.02	0.01	0.02	1
Margin of Victory	-0.01	-0.02	0.01	0	0.17	1
Leftist Government	0.09	0.07	-0.26	0.31	-0.12	-0.04	1
GDP/cap	0.22	0.12	0	0.02	-0.07	-0.01	0.03	1
Mayor's Education	0.15	0.18	-0.03	0.1	-0.04	0.04	0.09	0.09	1
Mayor'sAge	0.1	0.14	0.03	-0.07	-0.05	-0.06	-0.1	0.03	-0.17	1
Mayor's Public Experience	0.03	-0.02	0.05	-0.04	0.01	0.03	0.01	0.06	-0.05	0.03	1
Mayo r's Secon d Term	0.04	0.01	0.01	0.04	0.18	0.16	-0.04	0.02	-0.01	0.08	0.38	1
Royalties (Ig)	0.12	0.04	0.04	-0.01	-0.06	0	0.05	0.13	0.07	0.02	0.07	-0.01	1
Numberof Properties (In)	0.48	0.61	-0.02	0.04	-0.12	-0.07	0.1	0.15	0.29	0.13	-0.03	-0.04	0.12	1
Lag Expenditures (In)	0.46	0.32	0.01	0.04	-0.04	-0.01	0.04	0.23	0.12	0.09	0.07	0.03	0.1	0.49	1
Total Grants(ln)	0.47	0.42	0.03	0.02	-0.17	-0.01	0.1	0.36	0.21	0.11	0.12	0	0.22	0.7	0.51	1
First Administration Year	-0.03	-0.01	-0.06	0	-0.03	0.01	0.02	0.01	0.01	0.01	0.05	0.03	0.05	-0.01	0.02	0.09	1
Second Administration Year	0.07	0.01	-0.06	0.01	-0.03	0.01	0.02	0.09	0.01	0.01	0.05	0.03	0.11	0.01	0	-0.01	-0.43	1
Third Administrtation	0	0.02	0.03	0.01	0.03	-0.01	-0.02	-0.08	-0.01	-0.01	-0.06	-0.04	-0.11	-0.01	-0.01	-0.1	-0.33	-0.33	1

	(1) Random-effects	(2) Fixed-effects	(3) Arellano-Bond
Lag property tax collection/cap			-0 42^* Robust standard errors in parentheses * p < 0.01;
			(0.06)
Governor-mayor party alignment	-0.37	-0.21	-0.33
	(0.26)	(0.26)	(0.27)
President-mayor party alignment	-0.44	-0.61	-1.83
	(0.85)	(0.81)	(1.59)
City council support	0.67^* Robust standard errors in parentheses * p < 0.01;	0.63^* Robust standard errors in parentheses * p < 0.01;	0.44^* * p < 0.1
	(0.20)	(0.22)	(0.23)
Margin of victory	-0.02	-0.02	-0.01
	(0.01)	(0.01)	(0.01)
Leftist government	0.32	0.44	0.30
	(0.56)	(0.55)	(0.55)
GDP/cap	0.00	0.00	0.00
	(0.00)	(0.00)	(0.00)
Mayor's education	0.12	0.14	0.04
	(0.09)	(0.11)	(0.13)
Mayor's age	0.02	0.01	-0.00
	(0.02)	(0.02)	(0.02)
Mayor's public sector experience	-0.65	-0.71	-0.74
	(0.54)	(0.55)	(0.61)
Mayor's second term	0.08	0.31	0.65
	(0.60)	(0.60)	(0.64)
Royalties (ln)	0.07	0.10	-0.07
	(0.15)	(0.15)	(0.06)
Number of properties (ln)	6.48^* Robust standard errors in parentheses * p < 0.01;	-7.68	-51.88^ p < 0.05;
	(0.96)	(8.63)	(20.19)
Lag expenditures (ln)	4 47^* Robust standard errors in parentheses * p < 0.01;	8.53^* Robust standard errors in parentheses * p < 0.01;	-1.53
	(1.26)	(1.52)	(1.38)
Total grants (ln)	-0.85	-5.48^* Robust standard errors in parentheses * p < 0.01;	10 42^* Robust standard errors in parentheses * p < 0.01;
	(1.48)	(1.85)	(3.60)
First administration year	2 32^* Robust standard errors in parentheses * p < 0.01;	1 46^* Robust standard errors in parentheses * p < 0.01;	5.69^* Robust standard errors in parentheses * p < 0.01;
	(0.33)	(0.27)	(0.58)
Second administration year	4 73^* Robust standard errors in parentheses * p < 0.01;	4 34^* Robust standard errors in parentheses * p < 0.01;	5.39^* Robust standard errors in parentheses * p < 0.01;
	(0.38)	(0.36)	(0.69)
Third administration year	3.01^* Robust standard errors in parentheses * p < 0.01;	2 20^* Robust standard errors in parentheses * p < 0.01;	4 95^* Robust standard errors in parentheses * p < 0.01;
	(0.34)	(0.26)	(0.66)
Constant	-103.94^* Robust standard errors in parentheses * p < 0.01;	18.72	284.93^* Robust standard errors in parentheses * p < 0.01;
	(15.39)	(48.02)	(99.33)
Observations	4,632	4,632	2,936
R-squared		0.08
Arellano-Bond test AR(1): p > z			0.90
Arellano-Bond test AR(2): p > z			0.62
Sargan test, p > X²			0.22
Number of municipalities	827	827	810

	(1) Random-effects	(2) Fixed-effects	(3) Arellano-Bond
Lag property tax collection/cap			0 42^* Robust standard errors in parentheses * p < 0.01;
			(0.06)
Governor-mayor party alignment	-0.00	-0.00	-0.00
	(0.01)	(0.01)	(0.02)
President-mayor party alignment	-0.03	-0.03	-0.01
	(0.05)	(0.05)	(0.04)
City council support	0 02^* Robust standard errors in parentheses * p < 0.01;	0.02^ p < 0.05;	0.01
	(0.01)	(0.01)	(0.01)
Margin of victory	-0.00	-0.00	-0.00
	(0.00)	(0.00)	(0.00)
Leftist government	0.00	0.01	0.03
	(0.03)	(0.03)	(0.03)
GDP/cap	0.00	0.00	-0.00
	(0.00)	(0.00)	(0.00)
Mayor's education	0.00	0.00	0.00
	(0.00)	(0.00)	(0.01)
Mayor's age	0.00^ p < 0.05;	0.00^* * * p < 0.1	-0.00
	(0.00)	(0.00)	(0.00)
Mayor's public sector experience	-0.03	-0.03	-0.04
	(0.02)	(0.02)	(0.02)
Mayor's second term	0.01	0.01	0.05^ p < 0.05;
	(0.02)	(0.02)	(0.02)
Royalties (ln)	-0.01^* * * p < 0.1	-0.01	-0.01^* Robust standard errors in parentheses * p < 0.01;
	(0.00)	(0.00)	(0.00)
Number of properties (ln)	0 92^* Robust standard errors in parentheses * p < 0.01;	-0.11	-0.29
	(0.06)	(0.31)	(0.44)
Lag expenditures (ln)	-0 17^* Robust standard errors in parentheses * p < 0.01;	-0.05	0.14^** * * p < 0.1
	(0.06)	(0.06)	(0.07)
Total grants (ln)	-0.10	-0.10	-0.14
	(0.07)	(0.09)	(0.12)
First administration year	0 14^* Robust standard errors in parentheses * p < 0.01;	0 14^* Robust standard errors in parentheses * p < 0.01;	0 14^* Robust standard errors in parentheses * p < 0.01;
	(0.02)	(0.02)	(0.02)
Second administration year	0 11^* Robust standard errors in parentheses * p < 0.01;	0 11^* Robust standard errors in parentheses * p < 0.01;	0.09^* Robust standard errors in parentheses * p < 0.01;
	(0.01)	(0.01)	(0.02)
Third administration year	0.10^* Robust standard errors in parentheses * p < 0.01;	0.09^* Robust standard errors in parentheses * p < 0.01;	0.08^* Robust standard errors in parentheses * p < 0.01;
	(0.01)	(0.01)	(0.02)
Constant	_-2 46^* Robust standard errors in parentheses * p < 0.01;	3.95^ p < 0.05;	2.81
Observations	4,632	4,632	3,689
R-squared		0.07
Arellano-Bond test AR(1): p > z			0.03
Arellano-Bond test AR(2): p > z			0.70
Sargan test, p > X²			0.20
Number of municipalities	827	827	818

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