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Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons

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Iwan Barankay ()
Ben Lockwood ()

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Abstract

Advocates of fiscal decentralization argue that amongst other benefits, it can increase the productive efficiency of delivery of government services. This paper is one of the first to evaluate this claim empirically by looking at the association between expenditure decentralization and the productive efficiency of government using a data-set of Swiss cantons. We first provide careful evidence that expenditure decentralization is a powerful proxy for factual local autonomy. Further panel regressions of Swiss cantons provide robust evidence that more decentralization is associated with higher educational attainment. We also show that these gains lead to no adverse effects across education types but that male students benefited more from educational decentralization closing, for the Swiss case, the gender education gap. Finally, we present evidence of the importance of competence in government and how it can reinforce the gains from decentralization.

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Paper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 597.

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Date of creation: 19 Jul 2005
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Handle: RePEc:esx:essedp:597

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  4. Brian A. Jacob & Lars Lefgren, 2005. "What Do Parents Value in Education? An Empirical Investigation of Parents' Revealed Preferences for Teachers," NBER Working Papers 11494, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Lockwood, Ben, 2002. "Distributive Politics and the Costs of Centralization," Review of Economic Studies, Blackwell Publishing, vol. 69(2), pages 313-37, April.
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  13. Barankay, Iwan & Lockwood, Ben, 2006. "Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons," CEPR Discussion Papers 5639, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  14. Gilbert, Guy & Picard, Pierre, 1996. "Incentives and optimal size of local jurisdictions," European Economic Review, Elsevier, vol. 40(1), pages 19-41, January. [Downloadable!] (restricted)
  15. Lockwood, Ben, 2005. "Fiscal Decentralization: A Political Economy Perspective," The Warwick Economics Research Paper Series (TWERPS) 721, University of Warwick, Department of Economics. [Downloadable!]
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  20. de Figueiredo, Rui J P, Jr & Spiller, Pablo T & Urbiztondo, Santiago, 1999. "An Informational Perspective on Administrative Procedures," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 283-305, April.
  21. Caroline M. Hoxby, 2000. "Does Competition among Public Schools Benefit Students and Taxpayers?," American Economic Review, American Economic Association, vol. 90(5), pages 1209-1238, December. [Downloadable!] (restricted)
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  22. Besley, Timothy & Coate, Stephen, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 85-114, February.
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  23. Hanushek, E.A.omson, W., 1996. "Assessing the Effects of School Resources on Student Performance : An Update," RCER Working Papers 424, University of Rochester - Center for Economic Research (RCER).
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  25. Pranab K. Bardhan & Dilip Mookherjee, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Iwan Barankay & Ben Lockwood, 2006. "Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons," IZA Discussion Papers 2477, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Axel Dreher, 2006. "Power to the People? The Impact of Decentralization on Governance," Working papers 06-121, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  3. Clément Carbonnier, 2008. "Fiscal competition between decentralized jurisdictions, theoretical and empirical evidence," THEMA Working Papers 2008-17, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
  4. Sun Go & Peter H. Lindert, 2007. "The Curious Dawn of American Public Schools," NBER Working Papers 13335, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Revelli Federico, 2008. "Spend more, get more? An inquiry into English local government performance," Department of Economics Working Papers 200804, University of Turin. [Downloadable!]
  6. Giorgio Brosio & Ehtisham Ahmad & Vito Tanzi, 2008. "Local Service Provision in Selected OECD Countries: Do Decentralized Operations Work Better?," IMF Working Papers 08/67, International Monetary Fund. [Downloadable!]
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