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Power to the People: The E§ects of Participatory Budgeting on Municipal Expenditures and Infant Mortality in Brazil

Participatory budgeting, via which the common citizen is given the ability to interact with the elected politicians in the drafting of the local budget, became a popular political reform in Brazilian municipalities in the 1990s and attracted widespread attention across the world. This paper investigates whether the use of participatory budgeting in Brazilian municipalities in the period 1991-2004 has affected the pattern of municipal expenditures and had any measurable impact on living conditions. I show that the municipalities that made use of this participatory mechanism favored an allocation of public expenditures that closely matched the “popular preferences” and channeled a larger fraction of their total budget to key investments in sanitation and health services. I also find that this change in the composition of municipal expenditures is associated with a pronounced reduction in the infant mortality rates for municipalities which adopted participatory budgeting. This suggests that promoting a more direct interaction between service users and elected officials in budgetary design and implementation can affect both how local resources are spent and associated living standard outcomes.