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Welfare Benefits in Highly Decentralized Fiscal Systems: Evidence on Interterritorial Mimicking

Author

Listed:
  • Luis Ayala

    (Facultad de Ciencias Jurídicas y Sociales, Universidad Rey Juan Carlos, Spain)

  • Ana Herrero

    (Facultad de Derecho, UNED, Spain)

  • Jorge Martinez-Vazquez

    (International Center for Public Policy, Georgia State University, USA)

Abstract

This paper analyzes the determinants of welfare benefit levels within a highly fiscally decentralized context. More specifically, we analyze the role of mimicking as a driver of the institutional design of subnational government policies in the absence of federal co-ordination and financing. Empirically we focus on the welfare benefit programs of Spanish regional governments during the period 1996-2015. Our results strongly support the significant role played by mimicking: regional public agents observe what their peers are doing and act accordingly, and this takes place even in a context of low mobility of households. Moreover, we find evidence of vertical externalities: even in a completely decentralized framework, regions consider the benefits set by the central government as a benchmark when determining their own welfare benefit levels.

Suggested Citation

  • Luis Ayala & Ana Herrero & Jorge Martinez-Vazquez, 2019. "Welfare Benefits in Highly Decentralized Fiscal Systems: Evidence on Interterritorial Mimicking," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1905, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper1905
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    File URL: https://icepp.gsu.edu/files/2019/04/paper1905.pdf
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