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Evaluation of the Equalising Performance of Central Government Financial Assistance to the Communes

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  • Guy Gilbert

    (ENS-Cachan )

  • Alain Guengant

    (CNRS and Université de Rennes-I)

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    Abstract

    The 36,600 French communes are far from able to offer their residents and businesses the same level of local public services for a given tax burden. Tax wealth is concentrated in a small number of communes while the costs of providing services differ considerably from one commune to the next. The purpose of the regional equalisation policy is to smooth out these disparities. It concerns an annual sum of approximately ¬20 billion in transfers. The 2003 constitutional reform, which set a target for the system to move towards greater equality, steps up the need for an evaluation of equalisation today. A preliminary overall and commune-by-commune evaluation is presented here. The overall analysis shows that the equalisation mechanisms are relatively effective and that this effectiveness increases over time. They reduced purchasing power inequalities by some 40% in 2001 as opposed to 34% in 1994.

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    Bibliographic Info

    Article provided by Institut National de la Statistique et des Etudes Economiques in its journal Economie et Statistique.

    Volume (Year): 373 (2005)
    Issue (Month): (April)
    Pages: 81-108

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    Handle: RePEc:crs:ecosta:es373d

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    Related research

    Keywords: Equalisation; Fiscal Federalism; Inequalities; Public Finance;

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    References

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    1. Matthieu Leprince & Alain Guengant, 2002. "Interactions fiscales verticales et réaction des communes à la coopération intercommunale," Revue Économique, Programme National Persée, vol. 53(3), pages 525-535.
    2. Matthieu Leprince & Alain Guengant, 2002. "Interactions fiscales verticales et réaction des communes à la coopération intercommunale," Revue économique, Presses de Sciences-Po, vol. 53(3), pages 525-535.
    3. Le Grand, Julian, 1975. "Fiscal Equity and Central Government Grants to Local Authorities," Economic Journal, Royal Economic Society, vol. 85(339), pages 531-47, September.
    4. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    5. Turnbull, Geoffrey K & Djoundourian, Salpie S, 1993. " Overlapping Jurisdictions: Substitutes or Complements?," Public Choice, Springer, vol. 75(3), pages 231-45, March.
    6. Aronsson, Thomas & Lundberg, Johan & Wikstrom, Magnus, 2000. "The impact of regional public expenditures on the local decision to spend," Regional Science and Urban Economics, Elsevier, vol. 30(2), pages 185-202, March.
    7. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-33, November.
    8. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
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