This paper explores whether rules-based allocation is an effective tool for restraining political favoritism. We exploit a policy shift in distributing state lottery revenues to Israeli municipalities from discretion-based to rules-based allocation to estimate the extent of political favoritism. By comparing the likelihood of receiving grants by two types of localities before and after a policy reform, our approach offers a complementary empirical strategy for studying political favoritism that can be used even in the absence of exogenous variation in political connections; it likewise may reveal the overall impact of multiple political interests and social affiliations on favoritism. We find that political favoritism toward Jewish (versus Arab) and affluent (versus less affluent) municipalities diminished significantly after the reform but has not yet disappeared along the ethnic dimension. Our results suggest that adopting rules-based allocation might be effective in coping with political favoritism. 

Although there are various justifications for governments to subsidize vocational training for the unemployed, it is not entirely clear whether and when such programs are effective, and to what extent such programs can benefit participants in improving their performance beyond their historical earnings. This paper studies the long-term effects of training vouchers on the labor market outcomes of unemployed in Israel using a re-weighting-based matching. After 4 years from treatment, significant and positive effects are found for employment (+6%) and for earnings (+7%). The program’s effect is stronger for trainees who found a course-related job following training, pointing to the importance of achieving good matches between applicants and training. The effect is also stronger among women, Arabs, low-skilled workers and the long-term unemployed, suggesting that training vouchers are more effective for the least advantaged groups that are characterized by relative low attachment to the labor market. Assignment to subsidized training does not seem to increase survival rates in the labor market or to trigger an increase in wages beyond historical personal records. Thus, this paper suggests that short training for the unemployed is at most an effective tool for moderating the damage caused by unemployment and for restoring the previous situation but not as an opportunity to improve individuals’ performance to new levels.

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