Strategic targeting: the effect of institutions and interests on distributive transfers

Virtually every government provides distributive transfers for electoral purposes. However, the level and form of such transfers vary dramatically across countries. Although transfers take many forms, they can generally be characterized as being either broad (providing benefits to large segments of the electorate) or narrow (targeting benefits only to select groups of voters). Variation in the form of distributive transfers across countries can be explained by voters' economic interests and domestic institutions. Voters' preferences over transfer form, shaped in part by the mobility of their assets, together with a country's electoral rules determine the benefits politicians gain from providing either broad or narrow transfers. Using new measures of transfer form, the author finds that although majoritarian systems are more prone to narrow transfers, proportional systems are more responsive to increases in voter demand for narrow transfers, all else equal.