Municipal Public Expenditure in Colombia and its Effect on Income Inequality: An Analysis through Propensity Score Matching

Abstract

The objective of this research was to identify the effects of public social expenditure on education, health and housing in the reduction of income inequality in Colombia, in the period between 1980 and 2018. from the World Development Indicators of the World Bank (2019) the GINI was obtained, and the data from the CEDE of the Universidad de los Andes for municipal spending. A linear regression model of municipal spending against inequality and propensity score matching was used. The results allow us to conclude that the municipalities in the highest quartile of expenditure effectively reduce income inequality in their territories, it was evident that the higher level of expenditure could have had an impact on poverty reduction and the NBI index; It is also highlighted that municipalities with better public management indices reduce inequality in their territory.