<p>While competition among companies tends to be beneficial for the general public, this is not necessarily the case for competition among governments. Key in the fiscal competition theory is that the mobility of firms and households yields incentives for governments to aim to improve their relative position through successive undercutting of tax rates and welfare state arrangements. This mechanism has the potential to work as a disciplining device because it ensures that no jurisdiction is allowed to be grossly inefficient, because if it were grossly inefficient, mobile factors of production would move away. The main concern in the theoretical fiscal competition literature, however, has been that fiscal competition lowers government spending below their efficient levels. Another concern related to fiscal competition is that household mobility is likely to undermine attempts by governments to redistribute income. Empirical evaluation of both the existence and consequences of fiscal competition is the central topic of the thesis “An Empirical Analysis of Decentralization, Fiscal Competition and Welfare Policy”. </p><p>A particular focus of this thesis is on fiscal competition in welfare policy. With decentralized responsibility for the welfare benefit system in Norway, theory predicts that local governments will behave strategically in setting their welfare policy in order to avoid becoming ‘welfare magnets’. The key finding in Chapter 2 of this thesis is that Norwegian local governments in fact engage in such a ‘welfare game’. A local government will respond with reducing their welfare benefits when neighboring local governments reduce their welfare benefits. Encouraged by the finding in Chapter 2, Chapter 3 seeks to answer the question: Does Welfare Policy Affect Residential Choices? The analysis shows that Norwegian welfare recipients respond to changes in welfare policy by migrating. Local politicians concern about being to generous compared to their peers seem warranted. The analysis in Chapter 4 evaluates whether strategic interaction among Norwegian local governments in property tax decisions occurs. With limited mobility of the tax base and politically highly visible decisions, we interpret the strategic interaction found to be driven by yardstick competition, rather than competition for a mobile tax base. The final chapter differs from the rest in that it utilizes data from 18 OECD countries. The essay analyzes the effects of decentralization of government on the size and composition of government spending. Since jurisdictions with limited geographic scope (such as local governments) are, in general, more likely to face greater competitive pressures than larger ones (such as countries), it follows that the more fiscally decentralized countries are expected to experience stronger fiscal competition. One of the key findings is that decentralization of taxing powers is associated with less transfer spending, but unrelated to government consumption.</p> / Paper I reprinted with kind permission of Elsevier, Sciencedirect.com

While competition among companies tends to be beneficial for the general public, this is not necessarily the case for competition among governments. Key in the fiscal competition theory is that the mobility of firms and households yields incentives for governments to aim to improve their relative position through successive undercutting of tax rates and welfare state arrangements. This mechanism has the potential to work as a disciplining device because it ensures that no jurisdiction is allowed to be grossly inefficient, because if it were grossly inefficient, mobile factors of production would move away. The main concern in the theoretical fiscal competition literature, however, has been that fiscal competition lowers government spending below their efficient levels. Another concern related to fiscal competition is that household mobility is likely to undermine attempts by governments to redistribute income. Empirical evaluation of both the existence and consequences of fiscal competition is the central topic of the thesis “An Empirical Analysis of Decentralization, Fiscal Competition and Welfare Policy”. A particular focus of this thesis is on fiscal competition in welfare policy. With decentralized responsibility for the welfare benefit system in Norway, theory predicts that local governments will behave strategically in setting their welfare policy in order to avoid becoming ‘welfare magnets’. The key finding in Chapter 2 of this thesis is that Norwegian local governments in fact engage in such a ‘welfare game’. A local government will respond with reducing their welfare benefits when neighboring local governments reduce their welfare benefits. Encouraged by the finding in Chapter 2, Chapter 3 seeks to answer the question: Does Welfare Policy Affect Residential Choices? The analysis shows that Norwegian welfare recipients respond to changes in welfare policy by migrating. Local politicians concern about being to generous compared to their peers seem warranted. The analysis in Chapter 4 evaluates whether strategic interaction among Norwegian local governments in property tax decisions occurs. With limited mobility of the tax base and politically highly visible decisions, we interpret the strategic interaction found to be driven by yardstick competition, rather than competition for a mobile tax base. The final chapter differs from the rest in that it utilizes data from 18 OECD countries. The essay analyzes the effects of decentralization of government on the size and composition of government spending. Since jurisdictions with limited geographic scope (such as local governments) are, in general, more likely to face greater competitive pressures than larger ones (such as countries), it follows that the more fiscally decentralized countries are expected to experience stronger fiscal competition. One of the key findings is that decentralization of taxing powers is associated with less transfer spending, but unrelated to government consumption. / Paper I reprinted with kind permission of Elsevier, Sciencedirect.com

This dissertation examines, both theoretically and empirically, the impact of expenditure decentralization and decision-making in education on education output measured through net enrollment rates, repetition rates, dropout rates, completion rates, and test scores in science at the primary school level. We develop a theoretical model based on a behavioral production function model that investigates the potential direct effects of education decentralization on output, and indirect effects of education decentralization through its impact on family, school and teacher inputs. We develop an unbalanced panel data model of education decentralization by using various econometric estimators on a dataset of fifty-nine countries, developed and developing countries, covering the period 1970-2004 in five-year intervals. The empirical analysis in this dissertation improves upon previous empirical studies of education decentralization by using up-to-date comparative international data over time on measures of education decentralization and various indicators of primary schooling. We find empirical support that expenditure decentralization in education significantly improves repetition rates, dropout rates, completion rates and test scores at the primary school level. We are unable to find a significant effect on primary net enrollment rates. Further, we find that decisions on education planning and personnel management have a greater influence on education output when taken at the intermediate level of government (states and provinces). At the same time we find that allocating decisions on education at the school level can also significantly improve education output. Our empirical results support the hypothesized positive link between education decentralization and education outcomes. Additionally, this study is consistent with the recent trend towards decentralizing education around the world.

This dissertation contributes to the definition of an analytical framework for the study of optimal jurisdictional size for local service delivery. We argue that the standard economics framework for the analysis of optimal jurisdictional size importantly neglects individual preferences for political accountability. Our theoretical model shows that once we take into account such preferences, the optimal jurisdictional size for the provision of local public goods is smaller than in the standard model. We obtain empirical evidence to support our hypothesis from a sample of 197 countries. Our results show that, in fact, demand for political accountability leads to higher jurisdictional fragmentation both in terms of greater number of jurisdictions and smaller average population per jurisdiction. In addition, a meta-analysis of the empirical contributions to the study of economies of scale in the provision of local services shows that the economies of scale expected from service provision to larger jurisdictional sizes may not be present except for a handful of local services, and limited to relatively small population sizes. The results of the meta-analysis signal moderately increasing to constant returns to scale in the provision of traditional local services. In light of these results, we argue that forced jurisdictional consolidation programs across the world justified by perceptions of excessive jurisdictional fragmentation, or by the expectation of large expenditure savings due to economies of scale may have been, thus, erroneously designed. From a policy perspective, multi-layered institutional frameworks for service delivery (including cooperation and privatization among other options) may allow targeting available efficiency gains more efficiently than consolidation.

This dissertation contributes to the definition of an analytical framework for the study of optimal jurisdictional size for local service delivery. We argue that the standard economics framework for the analysis of optimal jurisdictional size importantly neglects individual preferences for political accountability. Our theoretical model shows that once we take into account such preferences, the optimal jurisdictional size for the provision of local public goods is smaller than in the standard model. We obtain empirical evidence to support our hypothesis from a sample of 197 countries. Our results show that, in fact, demand for political accountability leads to higher jurisdictional fragmentation both in terms of greater number of jurisdictions and smaller average population per jurisdiction. In addition, a meta-analysis of the empirical contributions to the study of economies of scale in the provision of local services shows that the economies of scale expected from service provision to larger jurisdictional sizes may not be present except for a handful of local services, and limited to relatively small population sizes. The results of the meta-analysis signal moderately increasing to constant returns to scale in the provision of traditional local services. In light of these results, we argue that forced jurisdictional consolidation programs across the world justified by perceptions of excessive jurisdictional fragmentation, or by the expectation of large expenditure savings due to economies of scale may have been, thus, erroneously designed. From a policy perspective, multi-layered institutional frameworks for service delivery (including cooperation and privatization among other options) may allow targeting available efficiency gains more efficiently than consolidation.

無 / The purpose of this study is to investigate the effect of fiscal decentralization on the tax effort of China’s local government after the Fiscal Reform was implemented in 1994. This study defines the tax effort as the ratio of the tax revenue of local government to its tax capacity, which is measured by per capita income, GRP (gross regional product), TTR (total taxable resources) and RTS/R (the representative tax system with regression analysis). Using official panel data for 31 provinces/cities during the 1996-2004 period and the two-way fixed effects model with different tax effort indices as the dependent variable, the primary finding of this study is that fiscal decentralization has a statistically significant and positive influence on the local government tax effort in China after 1994. That is to say, a local government with a higher degree of fiscal autonomy might put more effort into tax collection than its counterparts with a lower degree of fiscal autonomy.

Atkūrus nepriklausomybę Lietuvos fiskalinėje politikoje įvyko daug labai svarbių permainų: įvestas fiskalinis valdymas, tinkantis rinkos sąlygoms; mokesčių reforma iš esmės pakeitė valstybės pajamų sandarą, o valstybės finansų išlaidų sąrangą buvo pakeista perskirstant funkcijas tarp įvairių valdymo lygių ir skolos valdymas iškilo kaip visai nauja viešųjų finansų sritis. Šio darbo tema – “Lietuvos savivaldybių biudžetai (Vilniaus miesto savivaldybės biudžeto pavyzdžiu) ir biudžeto reforma Lietuvoje”. Pasirinka tema yra labai aktuali. Šiuo metu Lietuvoje vykdoma biudžeto reforma, kuria siekiama pagerinti valstybės bei savivaldybių biudžetų planavimą bei biudžeto procedūras, patobulinti finansinių išteklių valdymą ir kontrolę, o taip pat spręsti klausimus susijusius su Europos Sąjungos finansine parama. Nagrinėjant savivaldybių biudžetų klausimus, vienas svarbiausių ir aktualiausių - kokio lygio turi būti savivaldybių fiskalinis savarankiškumas. / The subject of the thesis is “Budgets of Lithuanian Municipalities (on the example of Vilnius City Municipality Budget) and Budget Reform in Lithuania.” The subject is very urgent. At present the budget reform is being carried out in Lithuania, and the aim of the reform is to improve planning and procedures of national and municipal budgets, to perfect management and control of financial resources and also to solve the problems related to the European Union budget. Considering the budget problems of municipalities one of the most important and urgent problems is what the level of fiscal-dependence of municipalities should be. The purpose of the thesis is to consider financing of municipality budgets and to analyse and evaluate the main regulations of the budget system reform in Lithuania and to present the conclusions. To reach the purpose, the following tasks are raised in the thesis: to examine Lithuanian budget system; to consider fiscal decentralization level in Lithuania; analyse the structure of finance in Lithuanian municipalities and describe the municipality budget; to consider and evaluate the budget reform. The thesis raises the following hypothesis: municipalities do not have fiscal self-dependence enough, that is why not all principles of the budget reform are effectively put into practise.

Vyriausybė gali daryti įtaką tiek bendrai šalies ekonominei politikai, tiek konkrečiai nedarbui ir infliacijai, manipuliuodama savo pajamų ir išlaidų politikomis, siekdama paveikti visuminę paklausą, taigi ir gamybos apimtį. Vyriausybės pajamų ir išlaidų politikos yra jos fiskalinės politikos instrumentai. Fiskalinė disciplina derinama prie pasirinktų šalies ūkio vystymosi krypčių ir prioritetų. Šio darbo tikslas – reaguojant į kintančią ekonominę situaciją atlikti Lietuvos fiskalinės politikos analizę, iškelti pagrindinius privalumus ir trūkumus, numatyti trūkumų pašalinimo kryptis bei pateikti prognozes ateičiai. / Fiscal policy refers to the government`s spending and taxing behaviour and generaly is devided into few categories: decisions regarding government budget policypolicies related to government purchases of goods, servicies and labour; policies regarding taxes (for instance, tax rates are controlled by the government) and expenditures; policies regarding transfer payments (such as unemployment and social security benefits, wellfare payments ant state pensions); decisions involving state debt managing and administration. Fiscal discipline is strongly affected by general state economical goals and strategy. The main goal of the work is to analyse the mechanism of Lithuanian fiscal policy, find and emphasize main qualities and imperfections, the ways to avoid regress and create personal forecasts for future according to variable economical situation.

My dissertation investigates the effects of citizen participation and subnational fiscal arrangements on the success of fiscal decentralization efforts in Vietnam. Using cluster analysis and regression analysis, I find that the success of decentralization efforts, explains not only by the degree of decentralized fiscal responsibilities and the proximity of local government, but also by the involvement of citizens in service delivery. I further identify that the sheer existence of participatory mechanisms in local service delivery does not promise better service provision. In some cases, participation may hurt such provision. My dissertation provides a unique glimpse into the effects of citizen participation in a highly centralized political system. The results of this dissertation contribute to the study of public governance in Asia and the broader comparative literature on decentralization.

The aim of this thesis is to analyse the system of tax sharing and grants in terms of interregional redistribution. Review of literature is divided into two parts. The first one relates to fiscal decentralization, fiscal imbalance (which arises as a result of decentralization), and fiscal need. The second part deals with the technical characteristics of shared taxes and subsidies in the Czech Republic. Based on established methodological procedures were carried out analysis of both systems. It was found out that into the budgets of local governments are redistributed funds which do not come from their territory. The result of analysis is the finding that both systems are based on the interregional redistribution. Last part of this thesis focuses on a brief analysis of the planned amendment.