Estimating the impact of participatory budget on observed outcomes

Abstract

This paper tests whether the Participatory Budget (OP) adopted by some municipalities in Brazil had any impact on the municipality efficiency or on income distribution using a quasi experimental approach. The results are mixed but they do show that OP municipalities may be deteriorating the quality of the health service delivery with no positive impact on the fiscal performance of the municipality. One explanatory hypothesis is that the program was dominated by groups of interest that are capturing more rent from the state than the former coalition. On the other hand there are some evidences of an improving in the efficiency of public education service what would confirm the alternative hypothesis that the OP broke the collusion between bureaucrats and the elite.