Managing Federal Transfers in Brazil: Do Coalition Members Reap Benefits?

Coalitions led by the president play an important role in the Brazilian legislature, but what do members of the president’s coalition gain from joining? We conduct a regression discontinuity analysis of discretionary, politically motivated federal transfers to Brazilian municipalities. Our innovation is to distinguish between the president’s co-partisan mayors and mayors aligned with other coalition members. We find that the president channels pre-election discretionary transfers to co-partisan mayors but does not target coalition members in municipalities. However, the president does not use these transfers to support co-partisan mayors against mayors aligned with coalition members. In other words, the president favors co-partisan mayors over opposition mayors in the two years preceding municipal elections, but not over mayors aligned with other coalition members. Consistent with a model in which coalition members have little agenda-setting power but can veto the president’s proposals, coalition members receive defensive benefits from joining the president’s coalition.