Decentralization and governance in Europe: Evidence from different expenditure components

Andreas Kyriacou and Oriol Roca Sagalés
Authors registered in the RePEc Author Service: Oriol Roca-Sagalés

No 1802, Working Papers. Collection A: Public economics, governance and decentralization from Universidade de Vigo, GEN - Governance and Economics research Network

Abstract: In this article, we consider the impact of fiscal decentralization on government quality by way of disaggregated measures of the former. Specifically, we break down fiscal decentralization into sub-central expenditure on public procurement and compensation of public sector employees. We find that decentralizing public procurement is bad for government performance while the decentralization of public sector wages improves governance. We relate the negative effect to the rent-seeking activity of interest groups and the positive effect to the informational advantage of sub-central provision. Moreover, we explore the impact of the Great Recession on our results and find that it is associated with stronger negative and positive effects of decentralization on governance, something which is consistent with the observed increased in the degree of decentralization since 2007.

Keywords: Fiscal decentralization; public procurement; public service provision; good governance. (search for similar items in EconPapers)
JEL-codes: D72 D73 H11 H72 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2018-02
New Economics Papers: this item is included in nep-eec
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http://infogen.webs.uvigo.es/WP/WP1802.pdf First version, 2018 (application/pdf)

Related works:
Working Paper: Decentralization and Governance in Europe: Evidence from Different Expenditure Components (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:gov:wpaper:1802

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