IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Regional inequality and decentralization: an empirical analysis

  • Christian Lessmann

This paper analyzes the impact of political and fiscal decentralization on regional inequalities, using a unique dataset which covers fifty-four countries at different stages of economic development. Cross-section and panel data estimations show that decentralization decreases regional inequalities in general. However, estimations using an interaction-variable approach imply that the effect depends on the level of economic development. While rich countries benefit from decentralization in that they achieve a more equal regional income distribution, decentralization may lead to higher regional inequalities in developing and emerging economies. The results point in the same direction for measures of fiscal and political decentralization, implying that autonomy in both decision making and fiscal authority are decisive in this context. Thus, when fostering decentralization in developing countries as proposed by international development agencies, the potential negative redistributional consequences should be taken into account. Keywords: regional inequality, decentralization, panel data

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.envplan.com/abstract.cgi?id=a44267
File Function: abstract
Download Restriction: Fulltext access restricted to subscribers, see http://www.envplan.co.uk/A.html for details

File URL: http://www.envplan.com/epa/fulltext/a44/a44267.pdf
File Function: main text
Download Restriction: Fulltext access restricted to subscribers, see http://www.envplan.co.uk/A.html for details

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Pion Ltd, London in its journal Environment and Planning A.

Volume (Year): 44 (2012)
Issue (Month): 6 (June)
Pages: 1363-1388

as
in new window

Handle: RePEc:pio:envira:v:44:y:2012:i:6:p:1363-1388
Contact details of provider: Web page: http://www.pion.co.uk

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. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  2. 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.
  3. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2007. "The Economic Consequences of Legal Origins," NBER Working Papers 13608, National Bureau of Economic Research, Inc.
  4. Andrés Rodríguez-Pose & Roberto Ezcurra, 2009. "Does decentralization matter for regional disparities? A cross-country analysis," Working Papers 2009-04, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  5. 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.
  6. Nobuo Akai & Masayo Hosio, 2009. "Fiscal Decentralization, Commitment and Regional Inequality: Evidence from State-level Cross-sectional Data for the United States," Journal of Income Distribution, Journal of Income Distribution, vol. 18(1), pages 113-129, March.
  7. 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.
  8. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
  9. Hansen, Nico & Kessler, Anke, 2004. "Interregional Redistribution and Mobility in Federations: A Positive Approach," CEPR Discussion Papers 4576, C.E.P.R. Discussion Papers.
  10. Ravi Kanbur & Anthony J. Venables & Guanghua Wan, 2005. "Introduction to the Special Issue: Spatial Inequality and Development in Asia," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 1-4, 02.
  11. Kanbur, Ravi & Zhang, Xiaobo, 2001. "Fifty Years Of Regional Inequality In China: A Journey Through Revolution, Reform And Openness," Working Papers 7236, Cornell University, Department of Applied Economics and Management.
  12. Timothy Besley & Maitreesh Ghatak, 2003. "Incentives, Choice, and Accountability in the Provision of Public Services," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 235-249, Summer.
  13. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
  14. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
  15. Richard E. Baldwin & Paul Krugman, 2002. "Agglomeration, Integration and Tax Harmonization," NBER Working Papers 9290, National Bureau of Economic Research, Inc.
  16. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
  17. Lessmann, Christian, 2009. "Fiscal decentralization and regional disparity: Evidence from cross-section and panel data," Dresden Discussion Paper Series in Economics 08/09, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  18. Rodriguez-Pose, Andres & Gill, Nicholas, 2006. "How does trade affect regional disparities?," World Development, Elsevier, vol. 34(7), pages 1201-1222, July.
  19. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
  20. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  21. G. Gulsun Arikan, 2004. "Fiscal Decentralization: A Remedy for Corruption?," International Tax and Public Finance, Springer, vol. 11(2), pages 175-195, 03.
  22. Roberto Ezcurra & Pedro Pascual, 2008. "Fiscal decentralization and regional disparities: evidence from several European Union countries," Environment and Planning A, Pion Ltd, London, vol. 40(5), pages 1185-1201, May.
  23. Jaime Bonet, 2006. "Fiscal decentralization and regional income disparities: evidence from the Colombian experience," The Annals of Regional Science, Springer, vol. 40(3), pages 661-676, August.
  24. Lessmann, Christian & Markwardt, Gunther, 2008. "One size fits all? Decentralization, corruption, and the monitoring of bureaucrats," Dresden Discussion Paper Series in Economics 14/08, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  25. repec:oup:restud:v:78:y::i:4:p:1345-1378 is not listed on IDEAS
  26. Ravi Kanbur & Tony Venables, 2005. "Introduction: Spatial inequality and development," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 1-2, January.
  27. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931, March.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:pio:envira:v:44:y:2012:i:6:p:1363-1388. 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: (Neil Hammond)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.