IDEAS home Printed from https://ideas.repec.org/a/eee/poleco/v93y2026ics017626802600011x.html

Does fiscal autonomy increase local income? Evidence from Italy

Author

Listed:
  • Ferraresi, Massimiliano
  • Herrmann, Benedikt
  • Loiacono, Luisa
  • Rizzo, Leonzio
  • Secomandi, Riccardo

Abstract

Can fiscal autonomy affect per capita income levels? We empirically investigate the impact of fiscal autonomy on per capita income through the proper use of local financial resources. Exploiting a natural experiment in Italy, we compare municipalities in the Autonomous Provinces of Trento and Bolzano, which retain and manage almost all their tax revenues, with neighbouring municipalities in Lombardy and Veneto, where only a small fraction of revenues is autonomously managed. Using a spatial fuzzy regression discontinuity design, we estimate the effect of financial fiscal autonomy on per capita income. We address the potential endogeneity of financial fiscal autonomy with a dummy variable identifying municipalities that manage almost all their tax revenues. Our findings show that higher levels of local financial fiscal autonomy increase per capita income: a one percentage point rise in the financial fiscal autonomy raises per capita income by 0.2–0.7%. This effect is largely driven by higher municipal-level administrative quality in municipalities with stronger fiscal autonomy. The results highlight that granting fiscal autonomy can enhance local economic performance.

Suggested Citation

  • Ferraresi, Massimiliano & Herrmann, Benedikt & Loiacono, Luisa & Rizzo, Leonzio & Secomandi, Riccardo, 2026. "Does fiscal autonomy increase local income? Evidence from Italy," European Journal of Political Economy, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:poleco:v:93:y:2026:i:c:s017626802600011x
    DOI: 10.1016/j.ejpoleco.2026.102816
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S017626802600011X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejpoleco.2026.102816?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    Citations

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


    Cited by:

    1. Preyer Elisabeth & Kalcheva Desislava & Curtale Riccardo & Tucci Michele & Kučas Andrius & Bel Germà & Damian Alexandru Cristian & Łukomska Julita & Šķiltere Sanita & Chtioui Matthieu & Hesse Mario & , 2026. "Local taxes and economic growth," JRC Research Reports JRC145286, Joint Research Centre.
    2. Manuel E. Lago & Santiago Lago-Penas & Jorge Martinez-Vazquez & Cristian Sepulveda, 2026. "Revenue Decentralization and Vertical Fiscal Imbalance: A Survey," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper2617, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:93:y:2026:i:c:s017626802600011x. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505544 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.