The Elderly Population and the Size and Composition of Local Government in Brazil

Abstract

Shelton (2007) showed that the elderly population (over 65 years old) is associated with a larger local government size (including social expenditures except transportation). This can be observed only in countries where the political system permits the influence of interest groups on local budget as a whole, such as Brazil (federalism with executive and legislative branches in three levels of government). Our results (FE-IV estimation) show that the elderly population is associated with smaller local government size, investment, wage expenditure, and social expenditure (including education, health, transportation, and housing). Additionally, our investigation suggests that the elderly may have this behavior because the best benefits are obtained by this group at the federal level. We also tested the same results when we considered only the non-compulsory elderly voters (aged over 70 years) and to obtain an impact much stronger.