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On the Size and Determinants of Inter-regional Redistribution in European Countries over the Period 1995-2009

The aim of this paper is to analyse cross-country differences in the degree of inter-regional redistribution achieved by means of taxes and expenditures in 21 European countries over the period 1995-2009. We rely on a standard approach based on the observation and comparison of both primary and disposable household income at regional scale. Once the redistributive effect in each country is quantified, we try to explain the drivers of cross-country time-series differences. According to our estimates, cross-national standard deviation is significant and much higher than time variation. Secondly, inter-regional redistribution is strongly and positively related to personal redistribution by means of taxes and social benefits in cash; and is negatively related to both the extent of regional disparities in primary income and to the degree of political and fiscal decentralization.

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File URL: http://icepp.gsu.edu/files/2015/03/ispwp1304.pdf
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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1304.

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Length: 25 pages
Date of creation: 12 Mar 2013
Date of revision:
Handle: RePEc:ays:ispwps:paper1304
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  1. Bruno Bises & Agnese Sacchi, 2011. "On Cash Transfers, In-Kind Provision, and the Size of Local Jurisdictions," Public Finance Review, SAGE Publishing, vol. 39(4), pages 527-550, July.
  2. Nuria Bosch & Marta Espasa & Pilar Sorribas, 2002. "La capacidad redistributiva y estabilizadora del presupuesto del gobierno central español," Hacienda Pública Española, IEF, vol. 160(1), pages 47-76, march.
  3. Hepp, Ralf & von Hagen, Jürgen, 2009. "Fiscal federalism in Germany: Stabilization and redistribution before and after unification," ZEI Working Papers B 01-2009, University of Bonn, ZEI - Center for European Integration Studies.
  4. Boadway, R. & Marchand, M., . "The use of public expenditures for redistributive purposes," CORE Discussion Papers RP 1131, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Decressin, Jorg, 2002. "Regional income redistribution and risk sharing: how does Italy compare in Europe?," Journal of Public Economics, Elsevier, vol. 86(2), pages 287-306, November.
  6. Erik Wibbels, 2005. "Decentralized Governance, Constitution Formation, and Redistribution," Constitutional Political Economy, Springer, vol. 16(2), pages 161-188, 06.
  7. Melitz, Jacques & Zumer, Frederic, 2002. "Regional redistribution and stabilization by the center in Canada, France, the UK and the US:: A reassessment and new tests," Journal of Public Economics, Elsevier, vol. 86(2), pages 263-286, November.
  8. Maria Flavia Ambrosanio & Massimo Bordignon & Floriana Cerniglia, 2008. "Constitutional reforms, fiscal decentralization and regional fiscal flows in Italy," DISCE - Quaderni dell'Istituto di Economia e Finanza ief0084, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  9. Santiago Lago Peñas, 2001. "Redistribución y Estabilización Macroeconómica en las Regiones Españolas: 1967-1993," Hacienda Pública Española, IEF, vol. 158(3), September.
  10. Robin W. Boadway & Maurice Marchand, 1990. "The Use of Public Expenditure for Distributive Purpose," Working Papers 796, Queen's University, Department of Economics.
  11. Paul, Gilles Saint & Verdier, Thierry, 1996. "Inequality, redistribution and growth: A challenge to the conventional political economy approach," European Economic Review, Elsevier, vol. 40(3-5), pages 719-728, April.
  12. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-83, June.
  13. Maurice Obstfeld & Giovanni Peri, 1998. "Regional non-adjustment and fiscal policy," Economic Policy, CEPR;CES;MSH, vol. 13(26), pages 205-259, 04.
  14. Luiz de Mello & Erwin R. Tiongson, 2006. "Income Inequality and Redistributive Government Spending," Public Finance Review, SAGE Publishing, vol. 34(3), pages 282-305, May.
  15. Pierfederico Asdrubali & Bent E. Sørensen & Oved Yosha, 1996. "Channels of Interstate Risk Sharing: United States 1963–1990," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1081-1110.
  16. Agnese Sacchi & Simone Salotti, 2014. "The Effects of Fiscal Decentralization on Household Income Inequality: Some Empirical Evidence," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(2), pages 202-222, June.
  17. Bayoumi, Tamim & Masson, Paul R, 1994. "Fiscal Flows in the United States and Canada: Lessons for Monetary Union in Europe," CEPR Discussion Papers 1057, C.E.P.R. Discussion Papers.
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