On the politics of local equalization and grant systems: Criteria objectivity and the strategic use of grants

We advance the argument that lacking criteria objectivity increases the scope for political-strategic use of interregional grants by allowing tailoring to political interests. Using the Danish 2020 equalization grants reform as a case, we first find that several newly introduced special grants are poorly based on criteria objectivity but still substantially impact redistribution. Second, these grants correlate with constituencies where the incumbent and parliamentary supporters and the reform coalition are strongly represented before the reform. Third, leveraging polling station data, we find a strong positive correlation between new non-objective grants and votes for the incumbent and parliamentary supporters in subsequent parliamentary elections. Fourth, individual-level survey data suggests non-objective grants may have attracted or kept voters loyal to the incumbent and its parliamentary supporters. We do not find a robust relationship between party support, voting, and changes in grants based on ‘objective’ criteria strengthening our claim that it is non-objective grants that are subject to political-strategic use. The paper contributes a new argument to literature pointing out importance of objectivity for strategic use of grants, and tests the argument empirically with new data using mixed methods.