@TechReport{iza:izadps:dp5208, author={Pitt, Mark M. and Menon, Nidhiya}, title={Spatial Decentralization and Program Evaluation: Theory and an Example from Indonesia}, year={2010}, month={Sep}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={5208}, url={https://www.iza.org/publications/dp5208}, abstract={This paper proposes a novel instrumental variable method for program evaluation that only requires a single cross-section of data on the spatial intensity of programs and outcomes. The instruments are derived from a simple theoretical model of government decision-making in which governments are responsive to the attributes of places and their populations, rather than to the attributes of individuals, in making allocation decisions across space, and have a social welfare function that is spatially weakly separable, that is, that the budgeting process is multi-stage with respect to administrative districts and sub-districts. The spatial instrumental variables model is then estimated and tested by GMM with a single cross-section of Indonesian census data. The results offer support to the identification strategy proposed.}, keywords={instrumental variables;program evaluation;spatial decentralization;Indonesia}, }