Can decentralisation help address poverty and social exclusion in Europe?

Poverty reduction and the tackling of social exclusion are overarching goals of development and welfare policies. This paper explores the extent to which decentralisation contributes to poverty and social exclusion alleviation in European countries and regions. We find evidence that increases in central government transfers of political, administrative, and fiscal authority to subnational tiers of government reduce poverty and address social exclusion at an aggregate level. This, however, mainly happens in countries with a high degree of governance quality and, fundamentally, in urban areas. The link between decentralisation and poverty and social exclusion alleviation is more uniform at the regional level, as greater regional autonomy is connected to lower poverty and social exclusion, regardless of the quality of regional government. Hence, when regional governments have the capacity to design their own independent policies, a reduction of poverty and social exclusion and improvements in well-being generally ensue.