Explaining Regional and Local Government

An Empirical Test of the Decentralization Theorem

Bibliographic Data

ID6263787
AuthorsArjan H Schakel (0000-0002-1173-9316, University of Edinburgh, corresponding author)
Year2010
Volume23
Issue2
Pages331-355
Publication date2010-04-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueGovernance (JOURNAL)
Journal identifiersISSN: 0952-1895 • E-ISSN: 1468-0491
PublisherWiley (PUBLISHER • GB)
DOI10.1111/j.1468-0491.2010.01482.x
OpenAlexW2085411638
LanguageEN
Citations received15
References cited49

Decentralization of policy provision is omnipresent yet we are not able to sufficiently account for the extent of this phenomenon. The decentralization theorem explains the decentralization of policy provision as a trade‐off between heterogenous preferences, interjurisdictional spillovers (externalities), and economies of scale. Empirical tests of the theorem have been hampered by a measurement problem on the independent as well as on the dependent variable. This article tackles these problems by using a new data set that combines a measure of externalities and scale effects of policies obtained from an expert survey with the actual provision of policies across governmental tiers in 40 countries. The analyses provide an empirical test of the decentralization theorem by showing that decentralization of policy provision is to a large extent determined by functional characteristics of policies and heterogenous preferences but other country‐specific variables, such as democracy, economic development, and European subsidies, also matter

Decentralization · Economic system · Economics · Empirical research · Externality · Government (linguistics · Market economy · Microeconomics · Public economics · Scale (ratio · Subsidy · Variable (mathematics · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Mathematics