השפעת מענקי הממשלה על תקציב הרשויות המקומיות

This study estimates the effects of equalization grants and intergovernmental transfers to finance education and welfare on local government expenditures, local revenues, and local budget deficit based on a panel data on 258 municipalities for the years 2005–2017. I found that an increase of 100 Shekels in equalization grants, which constitutes one fifth of total expenditures in disadvantaged municipalities, is associated with a rise of 82 Shekels.That size effect is different depending on the particular expenditure. The biggest effect of equalization grants is on education and municipal spending, and in particular on transitory expenditures such as paying debt. In addition, this study reveals that equalization grantsare used to reduce local budget deficit. As expected, the effects of intergovernmental transfers to finance welfare spending is greater intergovernmental transfers to finance education. It reflects the binding matching requirement associated with welfare spending.