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Income Inequality, Fiscal Decentralization and Transfer Dependency

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by Caroline-Antonia Goerl & Mike Seiferling
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Income Inequality, Fiscal Decentralization and Transfer Dependency by Caroline-Antonia Goerl & Mike Seiferling

Within the context of reigniting post crisis macroeconomic growth, income inequality has emerged as a topic of significant interest for both academics and policymakers (Bastagli, Coady, and Gupta, 2012) This study builds on past literature on fiscal decentralization suggesting that redistribution is most effectively carried out at sub-central levels of government. Using the IMF’s multi-sector Government Finance Statistics Yearbook database, this paper tests the impact of decentralized redistribution on income inequality for a globally representative sample of countries since 1980. The findings suggest that the decentralization of government expenditure can help achieve a more equal distribution of income. However, several conditions need to be fulfilled: i) the government sector needs to be sufficiently large, ii) decentralization should be comprehensive, including redistributive government spending, and, iii) decentralization on the expenditure side should be accompanied by adequate decentralization on the revenue side, such that subnational governments rely primarily on their own revenue sources as opposed to intergovernmental transfers.

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Ebook Details
Pages: 26
Size: 796 KB
Publisher: INTERNATIONAL MONETARY FUND
Date published:   2014
ISBN: 9781484354926 (DRM-EPUB)

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This product is listed in the following categories:

Nonfiction > Business & Economics > Public Finance
Nonfiction > Business & Economics > Urban & Regional

These authors have products in the following categories:

Nonfiction > Business & Economics > Economics > Macroeconomics
Nonfiction > Business & Economics > Public Finance
Nonfiction > Business & Economics > Urban & Regional
Nonfiction > Business & Economics > Economics
Nonfiction > Business & Economics > International > Economics

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05/28/2017
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