Centralized or decentralized financing of local governments? Consequences for efficiency and inequality of service provision
Compared with most countries the Norwegian system of financing local governments is highly centralized. Grants make up a substantial part of revenues and local taxes are highly regulated by the center. The development of the system was motivated by a desire to equalize service provision throughout the country. The purpose of this paper is to analyze possible consequences of more decentralized financing with local tax discretion. Contrary to the conventional wisdom the analysis indicates that decentralized financing is likely to give more equal provision of local public services. In addition, substantial efficiency gains can be obtained.
|Date of creation:||06 Dec 2006|
|Date of revision:|
|Contact details of provider:|| Postal: 7491 Trondheim|
Phone: 73 59 19 40
Fax: 73 59 69 54
Web page: http://www.svt.ntnu.no/iso/WP/wp.htm
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Seabright, Paul, 1996.
"Accountability and decentralisation in government: An incomplete contracts model,"
European Economic Review,
Elsevier, vol. 40(1), pages 61-89, January.
- Seabright, Paul, 1994. "Accountability and Decentralization in Government: An Incomplete Contracts Model," CEPR Discussion Papers 889, C.E.P.R. Discussion Papers.
- Raquel Fernandez & Richard Rogerson, 1995.
"Education Finance Reform and Investment in Human Capital: Lessons from California,"
NBER Working Papers
5369, National Bureau of Economic Research, Inc.
- Fernández, Raquel & Rogerson, Richard, 1999. "Education finance reform and investment in human capital: lessons from California," Journal of Public Economics, Elsevier, vol. 74(3), pages 327-350, December.
- Fernandez, Raquel & Rogerson, Richard, 1997. "Eudcation Finance Reform and Investment in Human Capital : Lessons from California," Working Papers 97-21, C.V. Starr Center for Applied Economics, New York University.
- Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
- Silva, Fabio & Sonstelie, Jon, 1995. "Did Serrano Cause a Decline in School Spending," National Tax Journal, National Tax Association, vol. 48(2), pages 199-215, June.
- Hoxby, Caroline M., 1999. "The productivity of schools and other local public goods producers," Journal of Public Economics, Elsevier, vol. 74(1), pages 1-30, October.
- Wallace E. Oates, 2006.
"On the Theory and Practice of Fiscal Decentralization,"
2006-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
- Wallace E. Oates, 2007. "On the Theory and Practise of Fiscal Decentralization," Working Papers 0701, CREI Università degli Studi Roma Tre, revised Jan 2007.
- Lockwood, Ben, 1998.
"Distributive Politics and the Costs of Centralization,"
CEPR Discussion Papers
2046, C.E.P.R. Discussion Papers.
- Ben Lockwood, 2002. "Distributive Politics and the Costs of Centralization," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 313-337.
- McGuire, Therese J., 1999. "Proposition 13 and Its Offspring: For Good or for Evil?," National Tax Journal, National Tax Association, vol. 52(n. 1), pages 129-38, March.
- Borge, Lars-Erik, 2000. "Charging for public services: the case of utilities in Norwegian local governments," Regional Science and Urban Economics, Elsevier, vol. 30(6), pages 703-718, December.
- Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
- Aronsson, Thomas & Wikstrom, Magnus, 1996. "Local public expenditure in Sweden a model where the median voter is not necessarily decisive," European Economic Review, Elsevier, vol. 40(9), pages 1705-1716, December.
- Rubinfeld, Daniel L., 1987. "The economics of the local public sector," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 11, pages 571-645 Elsevier.
- Poterba, James M & Rueben, Kim S, 1995. "The Effect of Property-Tax Limits on Wages and Employment in the Local Public Sector," American Economic Review, American Economic Association, vol. 85(2), pages 384-89, May.
- Borge, Lars-Erik, 1995. "Economic and Political Determinants of Fee Income in Norwegian Local Governments," Public Choice, Springer, vol. 83(3-4), pages 353-73, June.
- Loeb, Susanna, 2001. "Estimating the effects of school finance reform: a framework for a federalist system," Journal of Public Economics, Elsevier, vol. 80(2), pages 225-247, May.
- Borge, Lars-Erik & Rattso, Jorn, 1995. "Demographic shift, relative costs and the allocation of local public consumption in Norway," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 705-726, December.
- Mark Toma & Eugenia Toma, 1980. "Bureaucratic responses to tax limitation amendments," Public Choice, Springer, vol. 35(3), pages 333-348, January.
- Borge, Lars-Erik & Rattso, J.Jorn, 2004. "Income distribution and tax structure: Empirical test of the Meltzer-Richard hypothesis," European Economic Review, Elsevier, vol. 48(4), pages 805-826, August.
- Courant, Paul N. & Rubinfeld, Daniel L., 1981. "On the welfare effects of tax limitation," Journal of Public Economics, Elsevier, vol. 16(3), pages 289-316, December.
- Bergstrom, Pal & Dahlberg, Matz & Mork, Eva, 2004. "The effects of grants and wages on municipal labour demand," Labour Economics, Elsevier, vol. 11(3), pages 315-334, June.
- Murray, Sheila E & Evans, William N & Schwab, Robert M, 1998. "Education-Finance Reform and the Distribution of Education Resources," American Economic Review, American Economic Association, vol. 88(4), pages 789-812, September.
When requesting a correction, please mention this item's handle: RePEc:nst:samfok:7806. 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: (Hilde Saxi Gildberg)
If references are entirely missing, you can add them using this form.