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The impact of fiscal decentralization on income segregation

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Abstract

We investigate how decentralizing the provision and funding of a publicly provided good from central (or regional) to local governments affects income segregation in an urban area. As the previous theoretical literature suggests, local provision and funding of a publicly provided good by itself generates incentives for income segregation. However, other segregating forces such as local amenities are also at work in urban areas. We show that, once this important feature of urban economies is considered, decentralisation will reduce income segregation if the population has heterogeneous preferences for the publicly provided good.

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  • Francisco Martínez Mora, 2004. "The impact of fiscal decentralization on income segregation," Economic Working Papers at Centro de Estudios Andaluces E2004/68, Centro de Estudios Andaluces.
  • Handle: RePEc:cea:doctra:e2004_68
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    Keywords

    fiscal decentralisation; segregation; Tiebout; residential mobility.;

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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