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Do Local Public Expenditures on Functionally Impaired Crowd Out Other Local Public Expenditures?

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  • Birkelöf, Lena

    (Department of Economics, Umeå University)

Abstract

This paper examines whether local public expenditures on services to functionally impaired individuals crowd out other local public expenditures in Sweden. Over the last ten years, these expenditures have increased by more than 90 percent while other municipal expenditures have experienced increases of up to 30 percent. The impact of expenditures on functionally impaired individuals is tested on five different spending areas using a two-stage least squares (2SLS) fixed-effects model. While the results give no support for crowding out in the areas of social assistance, culture & leisure, and childcare & preschool, a negative relationship on spending for elderly & disabled care and education is found, suggesting that crowding out indeed occurs within the municipal sector. The negative relationships are significant both in a statistical and an economic sense.

Suggested Citation

  • Birkelöf, Lena, 2009. "Do Local Public Expenditures on Functionally Impaired Crowd Out Other Local Public Expenditures?," Umeå Economic Studies 797, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0797
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    More about this item

    Keywords

    Local public expenditures; Functionally impaired; Expenditure crowding out;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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