The Politics of Inequality: Cities as Agents of Redistribution

We analyze the extent to which mayors and council members direct block grant funds to individuals and communities in need and whether the decisions of these officials are shaped by political considerations. We motivate our analysis by proposing a model in which an elected official has a fixed budget of grant funds and preferences over both redistributive policy and winning re-election. Our model predicts that electorally secure incumbents are more likely to allocate funds on the basis of need than their electorally vulnerable counterparts. To test these expectations we use an original data set of neighborhood-level expenditures of Community Development Block Grant (CDBG) funds by the city of Los Angeles over a seven-year period. In particular, we examine how well neighborhood-level measures of need and neighborhood-level political variables, such as election results and voter participation rates, predict the allocation of CDBG money. The results of this research have broad implications for the design of social welfare policy.