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Fiscal decentralization and public sector efficiency: evidence from OECD countries

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  • Antonis Adam
  • Manthos Delis
  • Pantelis Kammas

    ()

Abstract

This paper studies the impact of fiscal decentralization on public sector efficiency (PSE). We first use a theoretical framework that illustrates the two opposing forces that shape a non-monotonic effect of fiscal decentralization on PSE. Subsequently, we carry out an empirical analysis for 21 OECD countries, between 1970 and 2000. A country-level dataset is used to measure PSE in delivering education and health services and the new indices are regressed on well-established decentralization measures. Irrespective of whether PSE concerns education or health services, an inverted U-shaped relationship has been identified between government efficiency in providing these services and fiscal decentralization. This relationship is robust across several different specifications and estimation methods. Copyright Springer-Verlag Berlin Heidelberg 2014

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Bibliographic Info

Article provided by Springer in its journal Economics of Governance.

Volume (Year): 15 (2014)
Issue (Month): 1 (February)
Pages: 17-49

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Handle: RePEc:spr:ecogov:v:15:y:2014:i:1:p:17-49

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Keywords: Public sector efficiency; fiscal decentralization; OECD countries; C14; C24; H11; H50;

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Cited by:
  1. Gijs Roelofs & Daniel van Vuuren, 2011. "The decentralization of Social Assistance and the rise of Disability Insurance enrolment," CPB Discussion Paper 185, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Paul Hallwood, 2010. "Reforming Taxation in the Scotland Act (1998): Hard Budget Constraints and the Inadequacy of the Calman Commission Proposals," Working papers 2010-19, University of Connecticut, Department of Economics.
  3. Neyapti, Bilin, 2013. "Fiscal decentralization, fiscal rules and fiscal discipline," Economics Letters, Elsevier, vol. 121(3), pages 528-532.
  4. Bilin Neyapti, 2003. "Fiscal Decentralisation and Deficits: International Evidence," Working Papers 2003/2, Turkish Economic Association.
  5. Nuta Alina Cristina & Nuta Florian Marcel, 2013. "Analiza Relatiei Dintre Descentralizarea Fiscala Si Cresterea Economica In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 204-209, April.
  6. Francesco Porcelli, 2011. "Electoral Accountability and Local Government Efficiency: Quasi-Experimental Avidence From the Italian Health Care Sector Reforms," series 0036, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Sep 2011.
  7. Antonis Adam & Manthos Delis & Pantelis Kammas, 2011. "Public sector efficiency: leveling the playing field between OECD countries," Public Choice, Springer, vol. 146(1), pages 163-183, January.
  8. Paul Hallwood & Ronald MacDonald, 2008. "A Review of the Empirical Evidence on the Effects of Fiscal Decentralization on Economic Efficiency: With Comments on Tax Devolution to Scotland," Working papers 2008-46, University of Connecticut, Department of Economics.
  9. Francesco Porcelli, 2009. "Effects of fiscal decentralisation and electoral accountability efficiency evidence from the Italian health care sector," Working Papers 2009/29, Institut d'Economia de Barcelona (IEB).

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