Advanced Search
MyIDEAS: Login to save this paper or follow this series

Fiscal Decentralization and Regional Disparity: A Panel Data Approach for OECD Countries

Contents:

Author Info

  • Christian Leßmann

Abstract

The advantages and disadvantages of public sector decentralization are widely discussedin economics and political science. While some authors argue that decentralization leads to an optimal provision of public services and a promotion of economic growth, others emphasize the dangers of competition associated with decentralization between subnational governments especially for redistributive reasons. These authors argue that poorer regions could not compete for mobile factors with the richer ones and, therefore, poor regions would get poorer and rich regions richer. This paper studies empirically the impact of fiscal decentralization on regional disparities using panel data for 17 OECD countries from 1980 to 2001. As the measurement of decentralization and regional disparity is one of the main difficulties of this research, both are discussed extensively and different measurement concepts are elaborated. The findings of this study are that a high degree of decentralization is connected with low regional disparities. Hence, poor regions have no disadvantages from decentralization, quite the contrary.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-Ifo_Working_Papers/wp-ifo-2005-2010/IfoWorkingPaper-25.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Papers No. 25.

as in new window
Length:
Date of creation: 2006
Date of revision:
Handle: RePEc:ces:ifowps:_25

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo-group.de
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Shankar, Raja & Shah, Anwar, 2003. "Bridging the Economic Divide Within Countries: A Scorecard on the Performance of Regional Policies in Reducing Regional Income Disparities," World Development, Elsevier, vol. 31(8), pages 1421-1441, August.
  2. Hans-Werner Sinn, 2004. "The New Systems Competition," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 5(1), pages 23-38, 02.
  3. Borck, Rainald & Pflüger, Michael P., 2004. "Agglomeration and Tax Competition," IZA Discussion Papers 1033, Institute for the Study of Labor (IZA).
  4. Fredrik Andersson & Rikard Forslid, 2000. "Tax Competition and Economic Geography," Econometric Society World Congress 2000 Contributed Papers 1356, Econometric Society.
  5. Ron Martin, 2000. "Emu Versus The Regions? Regional Convergence And Divergence In Euroland," ESRC Centre for Business Research - Working Papers, ESRC Centre for Business Research wp179, ESRC Centre for Business Research.
  6. Davoodi, Hamid & Zou, Heng-fu, 1998. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," Journal of Urban Economics, Elsevier, vol. 43(2), pages 244-257, March.
  7. Sinn, Hans-Werner, 1997. "The selection principle and market failure in systems competition," Journal of Public Economics, Elsevier, vol. 66(2), pages 247-274, November.
  8. Phillip Swagel & Steven Vincent Dunaway & Martin David Kaufman, 2003. "Regional Convergence and the Role of Federal Transfers in Canada," IMF Working Papers 03/97, International Monetary Fund.
  9. Niebuhr, Annekatrin, 2000. "Convergence and the effects of spatial interaction," HWWA Discussion Papers 110, Hamburg Institute of International Economics (HWWA).
  10. Ruben Enikolopov & Ekaterina Zhuravskaya, 2004. "Decentralization and Political Institutions," Economics Working Papers 0045, Institute for Advanced Study, School of Social Science.
  11. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Preserving Market Incentives," Working Papers, Stanford University, Department of Economics 97042, Stanford University, Department of Economics.
  12. Hans Jarle Kind & Helene Midelfart & Guttorm Schjelderup, 2000. "Competing for Capital in a "Lumpy" World," CESifo Working Paper Series 252, CESifo Group Munich.
  13. Ludema, Rodney D & Wooton, Ian, 1998. "Economic Geography and the Fiscal Effects of Regional Integration," CEPR Discussion Papers 1822, C.E.P.R. Discussion Papers.
  14. WILDASIN, David E., . "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," CORE Discussion Papers RP -831, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Oates, Wallace E, 1985. "Searching for Leviathan: An Empirical Study," American Economic Review, American Economic Association, vol. 75(4), pages 748-57, September.
  16. Gary Woller & Kerk Phillips, 1998. "Fiscal decentralisation and IDC economic growth: An empirical investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 139-148.
  17. Andr�s Rodr�guez-Pose & Nicholas Gill, 2004. "Is there a global link between regional disparities and devolution?," Environment and Planning A, Pion Ltd, London, vol. 36(12), pages 2097-2117, December.
  18. Ulrich Thießen, 2003. "Fiscal Decentralisation and Economic Growth in High-Income OECD Countries," Fiscal Studies, Institute for Fiscal Studies, vol. 24(3), pages 237-274, September.
  19. Euijune Kim & Euijune Kim & Sung Woong Hong & Soo Jung Ha, 2003. "Impacts of national development and decentralization policies on regional income disparity in Korea," The Annals of Regional Science, Springer, vol. 37(1), pages 79-91, 02.
  20. Stegarescu, Dan, 2004. "Public Sector Decentralization: Measurement Concepts and Recent International Trends," ZEW Discussion Papers 04-74, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  21. Kanbur, Ravi & Zhang, Xiaobo, 2001. "Fifty Years of Regional Inequality in China: A Journey through Revolution, Reform and Openness," CEPR Discussion Papers 2887, C.E.P.R. Discussion Papers.
  22. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2002. "Locational Competition and Agglomeration: The Role of Government Spending," CESifo Working Paper Series 775, CESifo Group Munich.
  23. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, vol. 74(1), pages 97-139, October.
  24. Frank Castles, 1999. "Decentralization and the Post-War Political Economy," CEPR Discussion Papers 399, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  25. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
  26. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  27. Joachim Ragnitz, 2013. "Konvergenz von Wirtschaftsräumen – Eine Illusion?," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, vol. 20(01), pages 03-04, 02.
  28. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
  29. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Adam, Antonis & Delis, Manthos D & Kammas, Pantelis, 2012. "Fiscal decentralization and public sector efficiency: Evidence from OECD countries," MPRA Paper 36889, University Library of Munich, Germany.
  2. Akramov, Kamiljon T. & Asante, Felix Ankomah, 2009. "Decentralization and local public services in Ghana: Do geography and ethnic diversity matter?," IFPRI discussion papers 872, International Food Policy Research Institute (IFPRI).
  3. Christian Lessmann, 2009. "Fiscal decentralization and regional disparity: evidence from cross-section and panel data," Environment and Planning A, Pion Ltd, London, vol. 41(10), pages 2455-2473, October.
  4. Kessler, Anke & Lessmann, Christian, 2010. "Interregional Redistribution and Regional Disparities: How Equalization Does (Not) Work," CEPR Discussion Papers 8133, C.E.P.R. Discussion Papers.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ifowps:_25. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.