The effects of fiscal decentralization on household income inequality: some empirical evidence

• Autores: Agnese Sacchi, Simone Salotti
• Localización: XIX Encuentro de Economía Pública: Políticas Públicas para la salida de la crisis, 2012, ISBN 978-84-695-1574-7, pág. 44
• Idioma: inglés
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• Resumen

  • In this paper we investigate the effects of fiscal decentralization on income inequality using a sample of 23 OECD countries over the period 1971-2000. We utilize novel and robust measures of fiscal decentralization based on different degrees of expenditure and tax autonomy of sub-central governments. We also use several different specifications to tackle the potential endogeneity and reverse causality issues. Our results highlight the importance both of the nature of fiscal decentralization - expenditure versus taxation - and of the extent to which responsibility and decision powers are actually assigned to local governments. An important finding is that a higher degree of tax decentralization is associated with higher household income inequality within a country. This suggests that even if fiscal decentralization could be attractiv