At $4 billion a year, the Community Development Block Grant (CDBG) is the largest source of federal aid to cities, and is targeted at cities with the highest levels of poverty. CDBG originated as part of Nixon’s New Federalism initiative, and replaced funding for several existing urban assistance programs with a single open-ended grant to city governments to use at their discretion. Block grants have become a popular policy tool since then, with proponents arguing that they empower local decision-makers who know best how funds should be spent. But are the CDBG funds being used for projects that benefit the urban poor, as Congress intended? Or do local politicians use the money for political ends, channeling funds to their supporters and swing voters? Given the large class gap in political participation, the poor are likely to lose out if politicians allocate funds to maximize their vote share rather than to help the neediest communities.
Political scientist Justin Phillips and economist Leah Brooks will carry out a five-city study to empirically investigate whether political considerations or the needs of the poor play a larger role in determining the local allocation of CDBG revenue. Phillips and Brooks have obtained data from the Department of Housing and Urban Development on CDBG expenditures by neighborhood in Chicago, Detroit, Los Angeles, Houston, and Philadelphia from 1998 to 2004. The investigators will combine this data with indices of economic deprivation in each neighborhood – such as the poverty level and unemployment rate – and precinct-level voting data to measure candidates’ electoral support in each neighborhood. If municipal governments use CDBG grants mainly to help the poor, neighborhood-level expenditures should be correlated with the measures of economic need. However, if project funding is driven mainly by political considerations, expenditures would be correlated more strongly with the level of voter support in each neighborhood, particularly when politicians have smaller electoral margins over all.
Reports and Publications
- Brooks, Leah and Justin Phillips. 2008. "An Institutional Explanation for the Stickiness of Federal Grants," Journal of Law, Economics and Organization 26 (2): 243-263. (PDF)
- Brooks, Leah and Justin Phillips. 2010. "The Politics of Inequality: Cities as Agents of Redistribution," Working Paper (PDF)
- Brooks, Leah, Justin Phillips and Maxim Sinitsyn. 2011. "The Cabals of a Few or the Confusion of a Multitude: The Institutional
Trade-off Between Representation and Governance," American Economic Journal: Economic Policy. 3 (1): 1-24. (PDF)