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Central-Local Government Relations in Transition: The Case of Swedish Child Care

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  • Gustafsson, Bjorn
  • Kjulin, Urban
  • Schwarz, Brita

Abstract

The provision of subsidized child care has grown to become a sizeable economic activity in Sweden during recent decades. This paper examines the changed financial relation between central and local governments and the impact of child-care grants on local government behaviour. We find that during an earlier regime, with a system of matching grants, local governments responded strongly to the incentives of the rules. This resulted in both intended and unintended outcomes, as well as a distortion of information to the central government. Experiences from a recent transition of regime towards a kind of closed block grant system, illustrates new types of adaptive behaviour but also the problem of finding a formula for a fair allocation of resources among local governments. When designing a block grant system a distinction must be made between expenditures and resource needs; cost expenditure data do not necessarily reflect resource needs in cases where there are national categorical equity goals related to social services of a merit-want character. Copyright 2002 by Kluwer Academic Publishers

Suggested Citation

  • Gustafsson, Bjorn & Kjulin, Urban & Schwarz, Brita, 2002. "Central-Local Government Relations in Transition: The Case of Swedish Child Care," Public Choice, Springer, vol. 110(3-4), pages 305-325, March.
    • Handle: RePEc:kap:pubcho:v:110:y:2002:i:3-4:p:305-25
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    References listed on IDEAS

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    1. Bergstrom, Ted & Blomquist, Soren, 1996. "The political economy of subsidized day care," European Journal of Political Economy, Elsevier, vol. 12(3), pages 443-457, November.
    2. Henry Ohlsson & Michael Lundholm, 1998. "Wages, taxes and publicly provided day care," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(2), pages 185-204.
    3. repec:bla:scandj:v:94:y:1992:i:0:p:s173-87 is not listed on IDEAS
    4. Sherwin Rosen, 1996. "Public Employment and the Welfare State in Sweden," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 729-740, June.
    5. Bergstrom, Ted & Blomquist, Soren, 1996. "The political economy of subsidized day care," European Journal of Political Economy, Elsevier, vol. 12(3), pages 443-457, November.
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    Cited by:

    1. Jakobsson, Niklas & Nordblom, Katarina, 2009. "Intergovernmental grants and fiscal competition," Working Papers in Economics 338, University of Gothenburg, Department of Economics.
    2. Halsteinli, Vidar & Ose, Solveig Osborg & Torvik, Heidi & Hagen, Terje P., 2006. "Allocation of labour to somatic and psychiatric specialist care--The effects of earmarked grants," Health Policy, Elsevier, vol. 78(2-3), pages 115-127, October.

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