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Expenditure Decentralization: Does It Make Us Happier? An Empirical Analysis Using a Panel of Countries

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  • Leonardo E. Letelier-S

    (Institute of Public Affairs, University of Chile, 8320208 Santiago, Región Metropolitana, Chile)

  • José L. Sáez-Lozano

    (Department of International and Spanish Economics, Faculty of Economics and Business Sciences, Office B-301, Campus Universitario de La Cartuja, 18071 Granada, Spain)

Abstract

This paper analyzes whether fiscal decentralization of education, health, housing, social protection, recreation, culture and religion, public order and safety, and transportation have a significant effect on individual well-being. The empirical analysis is based on a non-linear hierarchical model that combines individual data (level 1) with country-level data (level 2). We match 89,584 observations from the World Value Service and the European Value Service (various years) with the average value of data recorded for 30 countries by the Government Financial Statistics (IMF). While fiscal decentralization in education and housing appears to have a negative effect on well-being, this effect is positive in the cases of health and culture and recreation. We interpret this as evidence in favor of a “selective” decentralization approach.

Suggested Citation

  • Leonardo E. Letelier-S & José L. Sáez-Lozano, 2020. "Expenditure Decentralization: Does It Make Us Happier? An Empirical Analysis Using a Panel of Countries," Sustainability, MDPI, vol. 12(18), pages 1-17, September.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:18:p:7236-:d:408735
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