IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-22-00215.html
   My bibliography  Save this article

Political decentralization and income inequality in developping countries : does governance matter ?

Author

Listed:
  • Charly Ondobo Tsala

    (University of Ngaoundere)

  • henri Ngoa Tabi

    (university of Yaoundé 2)

Abstract

This paper presents the novel empirical relationship between decentralization and income inequality in 39 developing countries for the period of 1990-2017. We examine the mediating effect of governance in explaining the relationship between decentralization and income inequality. We proxy decentralization by political decentralization. We use the Gini coefficient as our primary measure of income inequality and adopt three Kaufman indicators as a measure of governance. We use Feaseble Generalized Least Square method and System Generalized Method of Moment in two steps as a technical econometric estimation. Our main finding is that the effect of political decentralization on income redistribution in developing countries depends on the quality of governance. From the interaction term, the negative effect of the political autonomy of subnational governments is high principally as the corruption contol get higher. Thus, sub-national governments in developing countries, by independently implementing their redistribution policies, can actually improve income redistribution if they achieve an optimal level of good governance by improving corruption control.

Suggested Citation

  • Charly Ondobo Tsala & henri Ngoa Tabi, 2022. "Political decentralization and income inequality in developping countries : does governance matter ?," Economics Bulletin, AccessEcon, vol. 42(4), pages 2103-2116.
  • Handle: RePEc:ebl:ecbull:eb-22-00215
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I4-P174.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Christian Lessmann, 2012. "Regional Inequality and Decentralization: An Empirical Analysis," Environment and Planning A, , vol. 44(6), pages 1363-1388, June.
    2. Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
    3. Neyapti, Bilin, 2006. "Revenue decentralization and income distribution," Economics Letters, Elsevier, vol. 92(3), pages 409-416, September.
    4. Agnese Sacchi & Simone Salotti, 2014. "The Effects of Fiscal Decentralization on Household Income Inequality: Some Empirical Evidence," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(2), pages 202-222, June.
    5. Barr, Nicholas, 2004. "Economics of the Welfare State," OUP Catalogue, Oxford University Press, edition 4, number 9780199264971.
    6. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
    7. Kumba Digdowiseiso & Syed M. Murshed & Sylvia I. Bergh, 2022. "How Effective Is Fiscal Decentralization for Inequality Reduction in Developing Countries?," Sustainability, MDPI, vol. 14(1), pages 1-19, January.
    8. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    9. Bahl, Roy & Martinez-Vazquez, Jorge & Wallace, Sally, 2002. "State and Local Government Choices in Fiscal Redistribution," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(4), pages 723-742, December.
    10. Frederick Solt, 2020. "Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 101(3), pages 1183-1199, May.
    11. Christian Lessmann, 2012. "Regional inequality and decentralization: an empirical analysis," Environment and Planning A, Pion Ltd, London, vol. 44(6), pages 1363-1388, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antonio N. Bojanic & LaPorchia A. Collins, 2021. "Differential effects of decentralization on income inequality: evidence from developed and developing countries," Empirical Economics, Springer, vol. 60(4), pages 1969-2004, April.
    2. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    3. Seidel, André, 2023. "A global map of amenities: Public goods, ethnic divisions and decentralization," Journal of Development Economics, Elsevier, vol. 164(C).
    4. Nupur Nirola & Sohini Sahu & Atrayee Choudhury, 2022. "Fiscal decentralization, regional disparity, and the role of corruption," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 757-787, June.
    5. Roberto Ezcurra & Andrés Rodríguez-Pose, 2017. "Does ethnic segregation matter for spatial inequality?," Journal of Economic Geography, Oxford University Press, vol. 17(6), pages 1149-1178.
    6. Pietrovito, Filomena & Pozzolo, Alberto Franco & Resce, Giuliano & Scialà, Antonio, 2023. "Fiscal decentralization and income (re)distribution in OECD countries’ regions," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 69-81.
    7. Jorge Díaz-Lanchas & Peter Mulder, 2021. "Does decentralization of governance promote urban diversity? Evidence from Spain," Regional Studies, Taylor & Francis Journals, vol. 55(6), pages 1111-1128, June.
    8. Oumarou Zallé & Pousseni Bakouan, 2024. "Spillover effects of fiscal decentralization on access to basic social services in Burkina Faso," Growth and Change, Wiley Blackwell, vol. 55(1), March.
    9. Stossberg Sibylle & Blöchliger Hansjörg, 2017. "Fiscal Decentralisation and Income Inequality: Empirical Evidence from OECD Countries," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 237(3), pages 225-273, June.
    10. Monica Escaleras & Peter T. Calcagno, 2018. "Does Fiscal Decentralization Affect Infrastructure Quality? An Examination Of U.S. States," Contemporary Economic Policy, Western Economic Association International, vol. 36(2), pages 410-422, April.
    11. Caroline-Antonia Goerl & Mr. Mike Seiferling, 2014. "Income Inequality, Fiscal Decentralization and Transfer Dependency," IMF Working Papers 2014/064, International Monetary Fund.
    12. Javier Mart n-Rom n & Luis Ayala & Juan Vicente, 2017. "Regional inequality in decentralized countries: a multi-country analysis using LIS," LIS Working papers 697, LIS Cross-National Data Center in Luxembourg.
    13. bucci, valeria & ferrara, giancarlo & resce, giuliano, 2022. "Fiscal decentralization and efficiency: empirical evidence from Italian municipalities," MPRA Paper 111515, University Library of Munich, Germany.
    14. Makreshanska, Suzana & Petrevski, Goran, 2016. "Decentralization, fiscal transfers and income inequality in Central and Eastern European countries," MPRA Paper 82181, University Library of Munich, Germany, revised 16 Oct 2017.
    15. Łukasz Piętak, 2022. "Regional disparities, transmission channels and country's economic growth," Journal of Regional Science, Wiley Blackwell, vol. 62(1), pages 270-306, January.
    16. Lessmann, Christian & Seidel, André, 2017. "Regional inequality, convergence, and its determinants – A view from outer space," European Economic Review, Elsevier, vol. 92(C), pages 110-132.
    17. Jaewoo Cho & Jae Hong Kim & Yonsu Kim, 2019. "Metropolitan governance structure and growth–inequality dynamics in the United States," Environment and Planning A, , vol. 51(3), pages 598-616, May.
    18. Vassilis Tselios & Andrés Rodríguez-Pose, 2020. "Did Decentralisation Affect Citizens’ Perception of the European Union? The Impact during the Height of Decentralisation in Europe," Economies, MDPI, vol. 8(2), pages 1-26, May.
    19. Feld, Lars P. & Frey, Christian & Schaltegger, Christoph A. & Schmid, Lukas A., 2021. "Fiscal federalism and income inequality: An empirical analysis for Switzerland," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 463-494.
    20. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.

    More about this item

    Keywords

    Political decentralization; income inequality; governance;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-22-00215. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.