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In government we trust: the role of fiscal decentralization

  • Jenny E. Ligthart


    (Tilburg University & University of Groningen & CAMA-Canberra & CESifo-Munich)

  • Peter van Oudheusden


    (Tilburg University)

We measure the contribution of fiscal decentralization to trust in government. Using repeated cross-country survey data of individuals on several measures of trust in government over the 1994{2007 period, we estimate an ordered response model of the government trust and fiscal decentralization nexus. We control for unobserved country characteristics, macroeconomic determinants, and individual characteristics. Our main finding is that fiscal decentralization increases trust in government. More specifically, a one percentage point increase in fiscal decentralization causes roughly a four-fifths of a percentage point increase in government trust. The beneficial effect of fiscal decentralization on trust in government is neither limited to nor necessarily large for relatively decentralized countries.

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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2011/24.

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Length: 50 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:ieb:wpaper:2011/10/doc2011-24
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