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Taxation and social protection under governance decentralisation

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  • Epstein, Gil S.
  • Gang, Ira N.

Abstract

Governments do not have perfect information regarding constituent priorities and needs. This lack of knowledge opens the door for groups to lobby in order to affect the taxes they pay the government. We examine the political economy of a decentralised revenue-raising authority in light of social protection expenditures by constructing a theoretical model of hierarchical contests and comparing the implications of centralised with decentralised governance. Increasing information available to the government may generate additional expenditures by constituencies trying to affect government taxation decisions.

Suggested Citation

  • Epstein, Gil S. & Gang, Ira N., 2019. "Taxation and social protection under governance decentralisation," European Journal of Political Economy, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:poleco:v:60:y:2019:i:c:s0176268017303142
    DOI: 10.1016/j.ejpoleco.2018.08.007
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    More about this item

    Keywords

    Governance; Decentralisation; Economic-models-of-political-processes; Contests; Rent-seeking; Intergovernmental-relations;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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