The Effects of Fiscal Decentralization on Household Income Inequality: Some Empirical Evidence

Abstract

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. Our results highlight the importance of both the nature of fiscal decentralization - expenditure versus taxation - and the extent to which responsibility and decision powers are actually assigned to local governments. 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 attractive according to efficiency reasons, it may actually have undesirable consequences on the equity side.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 93 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.