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Decentralization, Vertical Fiscal Imbalance, and Political Selection

Massimo Bordignon (), Matteo Gamalerio () and Gilberto Turati ()
Additional contact information
Matteo Gamalerio: University of Warwick

No def002, DISCE - Working Papers del Dipartimento di Economia e Finanza from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: In a career-concern model of politics with endogenous candidacy and different types of politicians, following a decentralization reform, politicians with different skills are elected in municipalities characterized by different levels of autonomous resources. As an effect, consumer welfare increases only, or mainly, in richer municipalities. We test these predictions by exploiting the differentiated reduction in Vertical Fiscal Imbalance in Italian municipalities, due to the strong difference in the tax base, following the decentralization reforms of the '90s. Results strongly support our predictions and are robust to several alternative stories.

Keywords: decentralization; vertical fiscal imbalance; quality of politicians (search for similar items in EconPapers)
JEL-codes: D72 D78 (search for similar items in EconPapers)
Pages: 49
Date: 2013-11
New Economics Papers: this item is included in nep-cdm and nep-pol
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http://dipartimenti.unicatt.it/economia-finanza-def002.pdf First version, 2013 (application/pdf)

Related works:
Working Paper: Decentralization, Vertical Fiscal Imbalance, and Political Selection (2014) Downloads
Working Paper: Decentralization, Vertical Fiscal Imbalance, and Political Selection (2013) Downloads
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