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Fiscal decentralization and income (re)distribution in OECD countries’ regions

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  • Pietrovito, Filomena
  • Pozzolo, Alberto Franco
  • Resce, Giuliano
  • Scialà, Antonio

Abstract

Cross-country income inequality has declined in the last decades, but this trend has been paralleled by an increase in within-countries inequality. At the same time, many governments have implemented fiscal decentralization policies, devolving increasing decision-making powers on fiscal matters to sub-national levels of government. In this paper, we provide empirical evidence on the relationship between fiscal decentralization and intra-regional income redistribution, based on regional level data on inequality and local government revenues for 183 regions of 14 OECD countries. Our results show that within region income redistribution is negatively associated with fiscal decentralization, especially when it takes the form of revenue decentralization.

Suggested Citation

  • Pietrovito, Filomena & Pozzolo, Alberto Franco & Resce, Giuliano & Scialà, Antonio, 2023. "Fiscal decentralization and income (re)distribution in OECD countries’ regions," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 69-81.
    • Handle: RePEc:eee:streco:v:67:y:2023:i:c:p:69-81
    DOI: 10.1016/j.strueco.2023.07.002
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    More about this item

    Keywords

    Fiscal decentralization; Inequality; OECD regions;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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