IDEAS home Printed from https://ideas.repec.org/a/jid/journl/y2009v18i1p113-129.html
   My bibliography  Save this article

Fiscal Decentralization, Commitment and Regional Inequality: Evidence from State-level Cross-sectional Data for the United States

Author

Listed:
  • Nobuo Akai

    (Osaka University)

  • Masayo Hosio

    (Otemon Gakuin University)

Abstract

Conventional approaches to fiscal decentralization suggest that decentralization lowers the power of redistribution, but recent theories argue that fiscal decentralization can work as a commitment device. The former effect is argued to cause an increase in inter-county inequality, while the latter suggests a decrease. This article first clarifies the relationship between fiscal decentralization and inter-county inequality by using cross-sectional data for the United States. Our result indicates that the achievement of autonomy by fiscal decentralization in poor (low-income) counties contributes to decreased inter-county inequality, but that this effect is not as large as the dominating adverse effect fiscal decentralization has on rich (highincome) counties.

Suggested Citation

  • Nobuo Akai & Masayo Hosio, 2009. "Fiscal Decentralization, Commitment and Regional Inequality: Evidence from State-level Cross-sectional Data for the United States," Journal of Income Distribution, Ad libros publications inc., vol. 18(1), pages 113-129, March.
    • Handle: RePEc:jid:journl:y:2009:v:18:i:1:p:113-129
    as

    Download full text from publisher

    File URL: http://pi.library.yorku.ca/ojs/index.php/jid/article/viewFile/22708/21173
    Download Restriction: Some fulltext downloads are only available to subscribers. See JID website for details.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Borjas, George J & Ramey, Valerie A, 1994. "Time-Series Evidence on the," American Economic Review, American Economic Association, vol. 84(2), pages 10-16, May.
    2. Kanbur, Ravi & Zhang, Xiaobo, 2001. "Fifty Years of Regional Inequality in China: A Journey through Revolution, Reform and Openness," CEPR Discussion Papers 2887, C.E.P.R. Discussion Papers.
    3. Michael Dunford, 1996. "Disparities in Employment, Productivity and Output in the EU: The Roles of Labour Market Governance and Welfare Regimes," Regional Studies, Taylor & Francis Journals, vol. 30(4), pages 339-357.
    4. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
    5. Robert G. Lynch, 2003. "Estimates of Income and Income Inequality in the United States and in Each of the Fifty States: 1988–1999," Journal of Regional Science, Wiley Blackwell, vol. 43(3), pages 571-588, August.
    6. Mark S. McGillivray & Matthew Peter, 1991. "Regional Income Inequality In A Developed Nation: A Cross-Sectional Study Of Australian Sub-State Regions," The Review of Regional Studies, Southern Regional Science Association, vol. 21(2), pages 137-151, Summer.
    7. Amos, Orley Jr., 1988. "Unbalanced regional growth and regional income inequality in the latter stages of development," Regional Science and Urban Economics, Elsevier, vol. 18(4), pages 549-566, November.
    8. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
    9. Richard Morrill, 2000. "Geographic variation in change in income inequality among US states, 1970-1990," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(1), pages 109-130.
    10. Dapeng Hu & Masahisa Fujita, 2001. "Regional disparity in China 1985-1994: The effects of globalization and economic liberalization," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(1), pages 3-37.
    11. Euijune Kim & Euijune Kim & Sung Woong Hong & Soo Jung Ha, 2003. "Impacts of national development and decentralization policies on regional income disparity in Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 37(1), pages 79-91, February.
    12. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July.
    13. Shankar, Raja & Shah, Anwar, 2003. "Bridging the Economic Divide Within Countries: A Scorecard on the Performance of Regional Policies in Reducing Regional Income Disparities," World Development, Elsevier, vol. 31(8), pages 1421-1441, August.
    14. Partridge, Mark D. & Rickman, Dan S. & Levernier, William, 1996. "Trends in U.S. income inequality: Evidence from a panel of states," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(1), pages 17-37.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Koomin Kim, 2023. "How gubernatorial budgetary power and interest groups affect vertical fiscal imbalances in the US states: Focusing on fiscal centralization and decentralization," Public Budgeting & Finance, Wiley Blackwell, vol. 43(2), pages 53-81, July.
    2. Bo, Shiyu & Deng, Liuchun & Sun, Yufeng & Wang, Boqun, 2021. "Intergovernmental communication under decentralization," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 606-652.
    3. Christian Lessmann, 2012. "Regional Inequality and Decentralization: An Empirical Analysis," Environment and Planning A, , vol. 44(6), pages 1363-1388, June.
    4. Christian Lessmann, 2012. "Regional inequality and decentralization: an empirical analysis," Environment and Planning A, Pion Ltd, London, vol. 44(6), pages 1363-1388, June.
    5. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2015. "Fiscal decentralization and regional disparities: The importance of good governance," Papers in Regional Science, Wiley Blackwell, vol. 94(1), pages 89-107, March.
    6. Song, Yang, 2013. "Rising Chinese regional income inequality: The role of fiscal decentralization," China Economic Review, Elsevier, vol. 27(C), pages 294-309.
    7. Vu, Binh & Nguyen, Tom & Smith, Christine & Nghiem, Son, 2015. "Vietnam's responses to provincial economic disparities through central-provincial government financial relations," MPRA Paper 67705, University Library of Munich, Germany, revised 2014.
    8. Yongzheng Liu & Jorge Martinez-Vazquez & Alfred M. Wu, 2017. "Fiscal decentralization, equalization, and intra-provincial inequality in China," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 248-281, April.
    9. Mahmoud Anber (PhD) ., 2022. "Effects of Fiscal Decentralization on Poverty Eradication in Egypt," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(5), pages 455-464, May.
    10. Reingewertz, Yaniv, 2014. "Fiscal Decentralization - a Survey of the Empirical Literature," MPRA Paper 59889, University Library of Munich, Germany.
    11. Christian Lessmann, 2009. "Fiscal Decentralization and Regional Disparity: Evidence from Cross-Section and Panel Data," Environment and Planning A, , vol. 41(10), pages 2455-2473, October.
    12. Carlos Usabiaga & E. Macarena Hernández-Salmerón, 2016. "Regional Growth and Convergence in Spain: Is the Decentralization Model Important?," EcoMod2016 9358, EcoMod.
    13. Diana Barros & Aurora A. C. Teixeira, 2021. "Unlocking the black box: A comprehensive meta-analysis of the main determinants of within-region income inequality," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 41(1), pages 55-93, February.
    14. Aleh Mazol, 2015. "Local self-governance in the Republic of Belarus," BEROC Policy Paper Series 22, Belarusian Economic Research and Outreach Center (BEROC).
    15. 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.
    16. Mr. Ehtisham Ahmad & Mr. Giorgio Brosio & Mr. Vito Tanzi, 2008. "Local Service Provision in Selected OECD Countries: Do Decentralized Operations Work Better?," IMF Working Papers 2008/067, International Monetary Fund.

    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. Christian Lessmann, 2009. "Fiscal Decentralization and Regional Disparity: Evidence from Cross-Section and Panel Data," Environment and Planning A, , vol. 41(10), pages 2455-2473, October.
    2. Christian Lessmann, 2012. "Regional Inequality and Decentralization: An Empirical Analysis," Environment and Planning A, , vol. 44(6), pages 1363-1388, June.
    3. Diana Barros & Aurora A. C. Teixeira, 2021. "Unlocking the black box: A comprehensive meta-analysis of the main determinants of within-region income inequality," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 41(1), pages 55-93, February.
    4. Christian Lessmann, 2012. "Regional inequality and decentralization: an empirical analysis," Environment and Planning A, Pion Ltd, London, vol. 44(6), pages 1363-1388, June.
    5. 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.
    6. 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.
    7. 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.
    8. Christian Leßmann, 2006. "Fiscal Decentralization and Regional Disparity: A Panel Data Approach for OECD Countries," ifo Working Paper Series 25, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Roberto Ezcurra & Pedro Pascual, 2008. "Fiscal Decentralization and Regional Disparities: Evidence from Several European Union Countries," Environment and Planning A, , vol. 40(5), pages 1185-1201, May.
    10. 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.
    11. Sidra Naeem & Rana Ejaz Ali Khan, 2021. "Fiscal Decentralization and Gender Equality in Developing Economies: Dynamics of Income Groups in Economies and Corruption," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(9), pages 745-761, September.
    12. Elezi, Shiret, 2024. "The impact of Fiscal decentralization on regional development," MPRA Paper 120847, University Library of Munich, Germany.
    13. Di Novi, Cinzia & Piacenza, Massimiliano & Robone, Silvana & Turati, Gilberto, 2019. "Does fiscal decentralization affect regional disparities in health? Quasi-experimental evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 78(C).
    14. 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.
    15. Xuhong Su & Kelan Lu & Xiangming Hu & Yuqiong Xiang, 2019. "Reforms on county-level fiscal governance in China: impact on urban-rural income inequality," International Review of Public Administration, Taylor & Francis Journals, vol. 24(2), pages 81-100, April.
    16. Jin, Jing & Zou, Heng-fu, 2005. "Fiscal decentralization, revenue and expenditure assignments, and growth in China," Journal of Asian Economics, Elsevier, vol. 16(6), pages 1047-1064, December.
    17. Euijune Kim & Euijune Kim & Sung Woong Hong & Soo Jung Ha, 2003. "Impacts of national development and decentralization policies on regional income disparity in Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 37(1), pages 79-91, February.
    18. Xin, Fangkun & Qian, Yilei, 2022. "Does fiscal decentralization promote green utilization of land resources? Evidence from Chinese local governments," Resources Policy, Elsevier, vol. 79(C).
    19. Tristan Canare & Jamil Paolo Francisco & Rose Ann Camille Caliso, 2020. "Decentralization and Income Inequality in a Panel and Cross‐Section of Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(4), pages 543-579, May.
    20. Bibek Adhikari & Saroj Dhital, 2021. "Decentralization and regional convergence: Evidence from night‐time lights data," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1066-1088, July.

    More about this item

    Keywords

    fiscal decentralization; inter-county inequality; commitment;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    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:jid:journl:y:2009:v:18:i:1:p:113-129. 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: Timm Boenke (email available below). General contact details of provider: https://edirc.repec.org/data/gyorkca.html .

    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.