Mayoral Experience or Municipal Capacity? Negative-Outcome Evidence on Municipal Budget Execution in Peru

Abstract

When experienced mayors govern better-performing municipalities, it is tempting to credit the leader. Yet municipalities with stronger administrative capacity may also be more likely to attract and elect experienced mayors, generating selection on pre-existing municipal capacity. We examine this identification problem using a balanced panel of 1,642 Peruvian district municipalities from 2015 to 2022. Within-municipality estimators and panel double machine learning recover a positive association between prior public-management experience and investment-budget execution, while formal education is substantially weaker. Negative-outcome controls reveal an important distinction. Across municipalities, mayoral human capital predicts GDP and HDI measured before the mayor took office, providing evidence of selection in cross-sectional comparisons. By contrast, the first-difference negative control aligned with the within-municipality design shows that changes in mayoral experience do not predict pre-determined district GDP, while they remain associated with budget execution. Sensitivity analysis and partial-identification bounds nevertheless do not support a clean causal interpretation of that within association. The results therefore separate two sources of variation often conflated in studies of political leadership and show how negative-outcome controls can sharpen the identification of leader effects.