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Income Heterogeneity and the Flypaper Effect

Author

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  • Witterblad, Mikael

    (Department of Economics, Umeå University)

Abstract

The purpose of this paper is to analyze the determinants of the local public expenditures and, in particular, try to explain the so called ’flypaper effect’. The analysis uses a political economy model to relate the existence and size of the flypaper effect to observable municipal characteristics such as the average tax base, income dispersion andwhether or not a change in the average tax base affects the tax share of the majority voter. The empirical part of the study is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base.

Suggested Citation

  • Witterblad, Mikael, 2007. "Income Heterogeneity and the Flypaper Effect," Umeå Economic Studies 718, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0718
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    Cited by:

    1. Witterblad, Mikael, 2008. "The Demand for Local Public Services in Sweden," Umeå Economic Studies 730, Umeå University, Department of Economics.

    More about this item

    Keywords

    Income Dispersion; Local Public Expenditures; Intergovernmental Relations;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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