Assessment of Equalization Effects of Government Transfers to Portuguese Municipalities Using Panel Data Methodologies
The equalization effects of transfer systems has been the subject of analyses to evaluate the effectiveness of redistribution policies and of the adequacy of revenue sharing mechanisms in providing sub national governments with adequate resources to undertake their public responsibilities. Achieving vertical and horizontal equalization among municipalities is an important issue both for long-term growth and financial stability. Reducing horizontal and vertical dissimilarities and promoting efficiency and equity is a common objective of the systems set up in many countries. In this regard, Portugal is no exception having introduced several reforms in the transfer system since the final decades of the 20th Century. Using panel data for all the municipalities, for the 1997-2010 period, this paper tests and evaluates whether there has been an equalization effect in the system of transfers to the municipalities. It also tests whether the various regulatory changes introduced improved or worsened the equalization effects. The use of panel data models permitted the use of a larger number of observations, increasing the number of degrees of freedom and decreasing collinearity between the explanatory variables as well as a better control for unobserved heterogeneity. The results show that on average the municipalities with the highest GDP per capita and own revenues per capita receive more transfers per capita, which suggests that the system does not contribute to equalization. It is also concluded that the successive changes of the system, namely those undertaken in 1998 and 2007, were significant in improving the equalization impact of the system. See above See above
|Date of creation:||03 Jul 2014|
|Contact details of provider:|| Postal: 351 Pleasant Street, #357, Northampton MA 01060-3900 USA|
Phone: +1 413 586 3203
Fax: +1 413 517 0900
Web page: http://www.ecomod.net
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ekd:006356:7419. 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: (Theresa Leary)
If references are entirely missing, you can add them using this form.