Fiscal decentralization and regional disparity: Evidence from cross-section and panel data

Christian Lessmann

No 08/09, Dresden Discussion Paper Series in Economics from Technische Universität Dresden, Faculty of Business and Economics, Department of Economics

Abstract: The advantages and disadvantages of public sector decentralization are widely discussed in economics and political science. Some authors argue that decentralization leads to an optimal provision of public services and promotes economic growth, while others emphasize the dangers of competition between sub-national governments, especially those associated with interregional redistribution. Using cross-section and panel data for 23 OECD countries from 1982 to 2000, this paper empirically studies the impact of fiscal decentralization on regional disparities. We find that a higher degree of decentralization is associated with lower regional disparities. Hence, poor regions experience no disadvantages from decentralization and instead appear to benefit.

Keywords: Decentralization; Regional Disparity; Inequality; Fiscal Federalism; Panel Data Evidence (search for similar items in EconPapers)
JEL-codes: H72 H77 R11 R50 (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (79)

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Related works:
Journal Article: Fiscal Decentralization and Regional Disparity: Evidence from Cross-Section and Panel Data (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuddps:0809

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