Redistributing Income Under Fiscal Vertical Imbalance

Marjorie Gassner (), Laurent Bouton () and Vincenzo Verardi ()

No 420, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: From the literature on decentralization, it appears that the fiscal vertical imbalance is somehow inherent to multi-level governements. Using a stylized model we show that this leads to a reduction in the extent of redistributive fiscal policies if the maximal tolerable size of government has been reached. To test this empirically we use some high quality data, from the LIS dataset, on individual incomes. The results are highly significant and point in the direction of our theoretical predictions.

Pages: 18 pages
Date: 2007-01
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:420

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