Explaining Fiscal Decentralization

Leonardo Letelier S.
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Leonardo Letelier S.: University of Chile

Public Finance Review, 2005, vol. 33, issue 2, 155-183

Abstract: This study uses a panel of sixty-four countries to test empirically various hypotheses about the causes of decentralization at the government level and in different functional spending areas. The empirical results find a negative impact of urbanization on decentralization. In the general case, a higher income per capita favors decentralization, with this effect being stronger for high-income countries. However, the use of functional measurements of decentralization shows that income per capita has a negative effect on health decentralization. Urbanization has a negative impact on the fiscal decentralization of health and education, and it has a positive effect on the share of housing expenditures being made by subnational governments.

Keywords: political economy; median voter; fiscal federalism; decentralization (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:33:y:2005:i:2:p:155-183

DOI: 10.1177/1091142104270910

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