Factors affecting relief aid policy of local governments – electoral competitiveness, fiscal capacity, and severity of crisis

Abstract

We examined the effects of three factors on whether and how local governments provide relief aid to their citizens in the context of the COVID-19 crisis: the demand side (electoral competitiveness), the supply side (fiscal capacity) and the severity of the crisis (the number of confirmed cases). Our findings indicate that local governments with lower electoral competitiveness chose the targeting method over the universal method. Those with stronger fiscal capacity tended to provide relief aid using the targeting method. For those in areas with few confirmed cases, the universal method was favoured. While the results for individual relief aid were consistent with those for the entire sample, the results for business relief aid were not.