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Fiscal decentralization and local government efficiency: does relative deprivation matter?

Alonso, Jose M. and Andrews, Rhys ORCID: 2019. Fiscal decentralization and local government efficiency: does relative deprivation matter? Environment and Planning C: Government and Policy 37 (2) , pp. 360-381. 10.1177/2399654418784947

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Fiscal decentralisation arguably improves government efficiency because it enhances responsiveness to local policy issues and incentivises fiscal discipline. However, critics suggest that central control over local spending is necessary to equalise fiscal outcomes between prosperous and deprived areas. Using a two-stage analysis, we investigate the validity of these arguments by analysing the separate and combined effects of fiscal decentralisation and socio-economic deprivation on the productive efficiency of English local governments during 2002–2008. The results suggest that decentralisation is positively related to productive efficiency and that there is a negative relationship between socio-economic deprivation and efficiency. Further analysis reveals that deprivation weakens the positive decentralisation–efficiency relationship, calling into question simplistic proposals for fiscal decentralisation.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Additional Information: Released with a Creative Commons Attribution Non-Commercial No Derivatives License (CC BY-NC-ND)
Publisher: SAGE Publications (UK and US)
ISSN: 0263-774X
Date of First Compliant Deposit: 1 June 2018
Date of Acceptance: 31 May 2018
Last Modified: 06 Nov 2023 22:33

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