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Regional inequalities, fiscal decentralization and government quality

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  • Andreas P. Kyriacou
  • Leonel Muinelo-Gallo
  • Oriol Roca-Sagalés

Abstract

Regional inequalities, fiscal decentralization and government quality. Regional Studies. There are theoretical arguments supporting the view that regional income inequalities, the degree of fiscal decentralization and the quality of government are simultaneously determined. This article argues that existing empirical work has failed to deal adequately with this possibility. In light of this, it applies a simultaneous equation model, which accounts for the joint determination of these three variables, to a panel of 23 Organisation for Economic Co-operation and Development (OECD) countries. The empirical evidence that emerges from the analysis suggests that a process of fiscal decentralization, accompanied by measures to improve the quality of government, would be an effective strategy for reducing regional inequalities.

Suggested Citation

  • Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2017. "Regional inequalities, fiscal decentralization and government quality," Regional Studies, Taylor & Francis Journals, vol. 51(6), pages 945-957, June.
    • Handle: RePEc:taf:regstd:v:51:y:2017:i:6:p:945-957
    DOI: 10.1080/00343404.2016.1150992
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    1. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
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    Cited by:

    1. Francisco J. Delgado, 2021. "On the Determinants of Fiscal Decentralization: Evidence From the EU," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(56), pages 206-206, February.
    2. Andreas P. Kyriacou & Oriol Roca Sagalés, 2018. "Decentralization and governance in Europe: Evidence from different expenditure components," Working Papers. Collection A: Public economics, governance and decentralization 1802, Universidade de Vigo, GEN - Governance and Economics research Network.
    3. 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.
    4. Eduardo A. Haddad & Luis A. Galvis & Inácio F. Araújo-Junior & Vinicius A.Vale, 2018. "Impact Assessment of Scenarios of Interregional Transfers in Colombia," Documentos de Trabajo Sobre Economía Regional y Urbana 16767, Banco de la República, Economía Regional.
    5. Nicola Pontarollo & Mercy Orellana & Joselin Segovia, 2020. "The Determinants of Subjective Well-Being in a Developing Country: The Ecuadorian Case," Journal of Happiness Studies, Springer, vol. 21(8), pages 3007-3035, December.
    6. Blane D. Lewis, 2017. "Local government spending and service delivery in Indonesia: the perverse effects of substantial fiscal resources," Regional Studies, Taylor & Francis Journals, vol. 51(11), pages 1695-1707, November.
    7. Elisa Aracil & Elena Maria Diaz & Gonzalo Gómez-Bengoechea & Rosalía Mota & David Roch-Dupré, 2024. "Regional Socioeconomic Assessments with a Genetic Algorithm: An Application on Income Inequality Across Municipalities," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 173(2), pages 499-521, June.
    8. 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.
    9. Ghazali Syamni* & Ichsan, 2018. "The Determinants of Districts/Cities Spending in Aceh Province: An Analysis of Electoral Districts," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 295-298:2.
    10. Andreas Kyriacou & Ronald Miranda-Lescano & Leonel Muinelo-Gallo & Oriol Roca-Sagales, 2025. "Subnational Life Expectancy Disparities in Low and Middle-Income Countries: Measurement and Determinants," Working Papers wpdea2501, Department of Applied Economics at Universitat Autonoma of Barcelona.
    11. 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.
    12. Yuanshuo Xu & Mildred E. Warner, 2022. "Crowding Out Development: Fiscal Federalism after the Great Recession," Environment and Planning A, , vol. 54(2), pages 311-329, March.
    13. Mihaela Onofrei & Lenuta Cojocariu & Florin Oprea, 2021. "Interconnections between local finances and regional development: a study case of Romania," Journal of Financial Studies, Institute of Financial Studies, vol. 10(6), pages 9-32, May.
    14. Francisco J. Delgado & Maria J. Presno, 2023. "Evolution of Fiscal Decentralisation in OECD Countries: A Club Convergence Analysis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 558-558, April.
    15. Yuan Li & Chuanjiang Yu & Yue Luo & Xinju He, 2024. "The higher‐ranking local officials and local economic growth: Evidence from China," Growth and Change, Wiley Blackwell, vol. 55(3), September.
    16. Jean-Paul Faguet & Qaiser Khan & Devarakonda Priyanka Kanth, 2019. "Decentralization’s Effects on Education and Health," World Bank Publications - Reports 32466, The World Bank Group.
    17. Jean-Paul Faguet & Qaiser Khan & Devarakonda Priyanka Kanth, 2021. "Decentralization’s Effects on Education and Health: Evidence from Ethiopia," Publius: The Journal of Federalism, CSF Associates Inc., vol. 51(1), pages 79-103.
    18. Aijaz Ali & Farhad Analoui, 2023. "Decentralisation by military regimes and challenges to citizen participation: an empirical reflection from Pakistan," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    19. Tristan Canare, 2021. "Decentralization and Development Outcomes: What Does the Empirical Literature Really Say?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 237(2), pages 111-151, June.
    20. Fernando Alexandre & Hélder Costa & Miguel Portela & Miguel Rodrigues, 2018. "Asymmetric regional dynamics: from bust to recovery," NIPE Working Papers 17/2018, NIPE - Universidade do Minho.
    21. Tristan Canare, 2022. "Decentralization and welfare: Evidence from a panel of countries," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(3), pages 767-796, September.
    22. Ryota Nakatani & Qianqian Zhang & Isaura Garcia Valdes, 2024. "Health Expenditure Decentralization and Health Outcomes: The Importance of Governance," Publius: The Journal of Federalism, CSF Associates Inc., vol. 54(1), pages 59-87.
    23. Muhammad Shahid & Khalil Ahmad & Ayesha Haider & Safdar Ali, 2024. "Decentralization and rural–urban income inequality: implications for inverted-U hypothesis of Pakistan," Evolutionary and Institutional Economics Review, Springer, vol. 21(2), pages 177-197, September.
    24. Fakhry El Feky & Nadia El Nemr & Sarah Mousa, 2023. "The Theoretical Impact of Fiscal Decentralisation on National Income Inequality: Does Quality of Governance Matter?," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 71-84, November.
    25. 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.

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