Central-Local Government Relations in Transition: The Case of Swedish Child Care

Bjorn Gustafsson, Urban Kjulin and Brita Schwarz

Public Choice, 2002, vol. 110, issue 3-4, 305-25

Abstract: The provision of subsidized child care has grown to become a sizeable economic activity in Sweden during recent decades. This paper examines the changed financial relation between central and local governments and the impact of child-care grants on local government behaviour. We find that during an earlier regime, with a system of matching grants, local governments responded strongly to the incentives of the rules. This resulted in both intended and unintended outcomes, as well as a distortion of information to the central government. Experiences from a recent transition of regime towards a kind of closed block grant system, illustrates new types of adaptive behaviour but also the problem of finding a formula for a fair allocation of resources among local governments. When designing a block grant system a distinction must be made between expenditures and resource needs; cost expenditure data do not necessarily reflect resource needs in cases where there are national categorical equity goals related to social services of a merit-want character. Copyright 2002 by Kluwer Academic Publishers

Date: 2002
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