Local governments, in-kind transfers, and economic inequality

Rolf Aaberge, Lasse Eika, Audun Langørgen and Magne Mogstad

Journal of Public Economics, 2019, vol. 180, issue C

Abstract: We examine how in-kind transfers provided by local governments affect economic inequality. The allocation of in-kind transfers to households and the adjustment for differences in needs are derived from a model of local government spending behavior. The model distinguishes between fixed and variable costs in production as well as mandatory programmatic spending components versus discretionary spending on different service sectors and target groups. To estimate the model, we combine Norwegian data from municipal accounts and administrative registers for the period 1982–2013. We find that economic inequality is considerably lower when taking in-kind transfers into account. While the poor benefit from receiving a relatively large share of public services, the equalizing effect of in-kind transfers tends to be smaller than the equalizing contribution from public cash transfers. When examining the time trends in inequality, we find that local governments attenuated the growth in cash income inequality by re-allocating in-kind transfers to low-income families. This reduction in inequality is mostly due to changes in spending priorities across service sectors and target groups, while the contribution from re-allocation of resources across municipalities is much smaller.

Keywords: Local government; Economic inequality; Public services; In-kind transfers (search for similar items in EconPapers)
JEL-codes: D31 H72 I30 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272718301907
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Local governments, in-kind transfers, and economic inequality (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:180:y:2019:i:c:s0047272718301907

DOI: 10.1016/j.jpubeco.2018.09.015

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().