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Fiscal decentralisation and the distributive incidence of the great recession

Author

Listed:
  • Pablo Beramendi
  • Melissa Rogers

Abstract

We argue that fiscal decentralisation is one important explanation for variation in distributive outcomes following the Great Recession. Using a difference in differences approach, we examine how fiscal decentralisation mediated the link between spatial distribution, redistributive effort, and interpersonal inequality in 21 OECD cases in the years following the Great Recession. We find that fiscally decentralised nations saw increased interpersonal inequality and lower redistribution, but lower inter-regional inequality. We attribute these results to the weaker redistributive mechanisms in fiscally decentralized nations, which increased interpersonal inequality while preserving market-driven productivity declines in high productivity areas that temporary increased regional convergence.

Suggested Citation

  • Pablo Beramendi & Melissa Rogers, 2018. "Fiscal decentralisation and the distributive incidence of the great recession," Working Papers. Collection A: Public economics, governance and decentralization 1810, Universidade de Vigo, GEN - Governance and Economics research Network.
  • Handle: RePEc:gov:wpaper:1810
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    File URL: http://infogen.webs.uvigo.es/WP/WP1810.pdf
    File Function: First version, 2018
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    References listed on IDEAS

    as
    1. Christian Lessmann, 2009. "Fiscal Decentralization and Regional Disparity: Evidence from Cross-Section and Panel Data," Environment and Planning A, , vol. 41(10), pages 2455-2473, October.
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    More about this item

    Keywords

    Fiscal decentralisation; Inter-regional inequality; Interpersonal inequality; Redistribution.;

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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