retrospectives eugenics and economics in the progressive era during the progressive era eugenic approaches to social and economic reform were popular respectable and widespread this essay documents the influence of eugenic ideas upon american economic reform especially in the areas of immigration and labor reform and tries to illuminate something of its causes and consequences

partial fiscal decentralization and demand responsiveness of the local public sector theory and evidence from norway this paper provides an empirical test of a principal tenet of fiscal federalism that spending discretion when granted to localities allows public good levels to adjust to suit local demands the test is based on a simple model of partial fiscal decentralization under which earmarking of central transfers for particular uses is eliminated allowing funds to be spent according to local tastes the greater role of local demand determinants following partial decentralization is confirmed by the paper s empirical results which show the effects of the 1986 norwegian reform

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

ethnicity neighborhoods and human capital externalities the socioeconomic performance of today s workers depends not only on parental skills but also on the average skills of the ethnic group in the parents generation or ethnic capital this paper investigates the link between the ethnic externality and ethnic neighborhoods the evidence indicates that residential segregation and the external effect of ethnicity are linked partly because ethnic capital summarizes the socioeconomic background of the neighborhood where the children were raised ethnicity has an external effect even among persons who grow up in the same neighborhood when children are exposed frequently to persons who share the same ethnic background copyright 1995 by american economic association

income redistribution in a common labor market when households are mobile among jurisdictions income redistribution by individual jurisdictions creates fiscal externalities a model of interjurisdictional migration is used to study the nature of this redistributive externality analysis of optimal redistribution and optimal corrective subsidies from higher level governments shows that benefit levels for the recipients of income transfers and tax rates on mobile taxpayers should be equalized across jurisdictions a system of jurisdictions with a common labor market can achieve welfare improvements through coordination of domestic redistributive policy or through the intervention of a higher level government copyright 1991 by american economic association

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

explaining regional autonomy differences in decentralized countries why do groups want to secede and where is demand for self determination most likely to arise we argue self determination demand is moderated by the projected economic costs of policy autonomy the trade off between income and sovereignty implies that other things being equal richer regions are more likely to demand more autonomy this trade off suggests that relative regional income is a key predictor of autonomy demands we show evidence of this using new data collected at the level of second tier administrative sub divisions in 48 decentralized countries consistent with a demand and supply model of self determination we find that levels of policy autonomy are positively correlated with relative regional income regional population share natural resource endowment and regional inter personal inequality ethnically distinct regions have lower sovereignty which could explain higher levels of conflict in these regions but this association is conditional on controlling for the interactive effects be

does decentralization contribute to efficiency evidence from oecd countries abstractthis article provides evidence on the relationship between fiscal decentralization and technical efficiency we begin the first stage of this study with a data envelopment analysis to obtain technical efficiency estimates for a sample of 23 oecd countries over the period 1992 2009 in a second stage we explore the effects of fiscal decentralization and other control variables on technical efficiency the results including all the control variables reveal a statistically significant negative relationship between fiscal decentralization of public expenditure and technical efficiency

on the endogenous allocation of decision powers in federal structures abstract this paper provides a political economy explanation of the degree of centralization in economic policy making to determine which policies are to be centralized regions select representatives who then negotiate the degree of centralization and the regional cost shares of centrally decided policies we show that the resulting degree of centralization is suboptimally low voters strategically delegate to representatives who are averse to public spending and hence prefer decentralized decisions in order to reduce their region s cost share when spillovers are asymmetric strategic delegation is stronger at the periphery than at the center

decentralization and international tax competition abstract this paper models tax competition between two countries that are divided into regions in the first stage of the game the strategy variable for each country is the division of a continuum of public goods between central and regional government provision in the second stage the central and regional governments choose their tax rates on capital a country s decentralization level serves as a strategic tool through its influence on the mix of horizontal and vertical externalities that exists under tax competition in contrast to standard tax competition models decentralizing the provision of public goods may improve welfare

a comprehensive analysis of expenditure decentralization and of the composition of local public spending sacchi a and salotti s a comprehensive analysis of expenditure decentralization and of the composition of local public spending regional studies many industrialized countries have recently implemented fiscal decentralization reforms assigning more spending responsibility to sub national governments this paper investigates the causes of the decentralization of different categories of public expenditure in 19 developed countries over the period 1980 2006 different models for each of the spending functions under analysis are estimated adopting a general to specific empirical approach results confirm existing findings on the negative link between regional income disparities and expenditure decentralization a similarly negative relationship is found for a set of demographic variables leading to the conclusion that macroeconomic and more importantly political factors are responsible for the recent increase in decentralization finally the analysis is completed by a study of the factors driving sub n

decentralization and political career concerns abstract politicians career paths often start at some subnational governments and end at the national one allocation of authorities among national and subnational governments affects i how tempting the prospects of taking national offices are and hence how strong bureaucrats political career concerns are and ii whether the incentives generated by these political career concerns can be put into productive use at subnational governments we illustrate this tradeoff in determining the optimal degree of decentralization using china as a case study we also compare the equilibrium degree of decentralization in autocracy and in democracy

why countries are fiscally decentralizing this paper models and empirically investigates underlying forces that promote governmental decentralization or effective federalism in the world over the last 25 years a move to a federal system is based on the demand by hinterland regions for local autonomy which increases with national income growth greater relative hinterland population and increasing national population it is influenced as well by the degree of democratization nationally and locally decentralization is measured by both institutional indices indicating greater devolution of power to local governments and the share of local governments in national government consumption empirically the paper finds that decentralization changes in ways predicted in particular it increases with economic growth country size and population institutional structures based on colonial experience and initial constitutional provisions also matter

inequality and the territorial fragmentation of solidarity a long tradition of research has shown decentralized political struc tures as an important cause behind lower levels of redistribution and higher levels of inequality this article offers an alternative interpretation of the association between fragmented fiscal structures and higher levels of inequality i argue that the distribu tive effects of decentralization depend on the preexisting territorial patterns of inequal ity therefore the political choice between alternative fiscal structures is largely driven by their expected distributive consequences as a result the territorial structure of inequality becomes an important factor to explain why some fiscal structures are more integrated than others two mechanisms link regional income distributions and preferences about the decentralization of redistributive policy differences in the demand for redistribution associated with interregional income differences and dif ferences in the demand for social insurance associated with the incidence of labor market risks i test the argument using a data set of fourteen countries in the orga nization for economic cooperation and development oecd over the period 1980 2000 in addition i illustrate the potential of the approach by analyzing why social solidarity remains territorially fragmented in the european union despite the fact that it has a common currency and a common market

natural resources decentralization and risk sharing can resource booms unify nations previous studies imply that a positive regional fiscal shock such as a resource boom strengthens the desire for separation in this paper we present a new and opposite perspective we construct a model of endogenous fiscal decentralization that builds on two key notions a trade off between risk sharing and heterogeneity and a positive association between resource booms and risk the model shows that a resource windfall causes the nation to centralize as a mechanism to either share risk and or prevent local capture depending on the relative bargaining power of the central and regional governments we provide cross country empirical evidence for the main hypotheses finding that resource booms i decrease the level of fiscal decentralization with no u shaped patterns ii cause the former due to risk sharing incentives primarily when regional governments are relatively strong and iii have no effect on political decentralization

on government centralization and fiscal referendums abstract several authors have argued that a centralization of fiscal powers in a federation is less likely to occur if citizens have to approve a change in the assignments of responsibilities by a popular referendum this outcome may be due to the fact that logrolling is more difficult under direct than under representative democracy it may also be caused by citizens fear that a centralization of fiscal authority facilitates the extraction of rents by the government or the legislature in this paper we test the hypothesis that centralization is less likely under referendum decision making in the unique institutional setting of switzerland using a panel of swiss cantons from 1980 to 1998 the empirical analysis provides evidence that referendums induce less centralization of fiscal activities

unemployment and labor force participation in the united states abstract this paper uses historical data from the united states to investigate the relationship between unemployment and labor force participation cointegration analysis supports a long run relationship between these two variables which leads us to question the empirical relevance of the unemployment invariance hypothesis for the united states

the size and scope of government comparative politics with rational politicians we try to demonstrate how economists may engage in research on comparative politics relating the size and composition of government spending to the political system a downsian model of electoral competition and forward looking voting indicates that majoritarian as opposed to proportional elections increase competition between parties by focusing it into some key marginal districts this leads to less public goods less rents for politicians more redistribution and larger government a model of legislative bargaining and backward looking voting indicates that presidential as opposed to parliamentary regimes increase competition between both politicians and voters this leads to less public goods less rents for politicians less redistribution and smaller government we confront these predictions with cross country data from around 1990 controlling for economic and social determinants of government spending we nd strong and robust support for the prediction that the size of government is smaller under presidential regimes and weaker support for the prediction that majoritarian elections are associated with less public goods

decentralization and the composition of public expenditure in spain gonzalez alegre j decentralization and the composition of public expenditure in spain regional studies this paper examines the effects of fiscal decentralization on the economic distribution of public expenditures using panel data from the seventeen spanish regions 1984 2003 it is shown that fiscal decentralization is a crucial determinant of the share of the public budget devoted to capital the estimation run is based on a model in which the utility of the representative agent from the current public expenditure depends on the distance to the level of the administration that provides it that could be the cause why decentralized economies experience a higher share of current expenditure in the budget of the public administrations gonzalez alegre j la decentralisation et la structure des depenses publiques en espagne regional studies cet article cherche a examiner l impact de la fiscalite decentralisee sur la distribution economique des depenses publiques a partir des donnees provenant d une

unemployment and labour force participation in sweden abstract this paper investigates the relationship between swedish unemployment and labour force participation cointegration analysis supports a robust long run relationship between the two variables this finding puts the empirical relevance of the unemployment invariance hypothesis into question

who wants political integration evidence from the swedish eu membership referendum abstract the regional voting pattern of the swedish european union eu membership referendum is analyzed to determine voters preferences over two fiscal regimes an autonomous sweden or sweden as part of the eu a major difference between these regimes is that autonomy gives greater national discretion to handle risk sharing and redistribution between regions i find that inhabitants of rich and stable regions with high levels of schooling small receipts of central government transfers and trade relations displaying comparative advantages towards the eu were relatively positive to membership a plausible interpretation is thus that voters in safe and rich regions voted in favor of dismantling the swedish transfer system

fiscal decentralization in rentier regions evidence from russia summary the paper argues that governments in regions that rely heavily on intergovernmental transfers and natural resource rents face serious distortions in their incentive structure as a result such regions tend to have more fiscally centralized governments than the regional characteristics would suggest data on russian regions in the late 1990s early 2000s support this hypothesis advancing intraregional fiscal decentralization in rentier regions could reduce policy distortions and make the subnational environment more supportive of economic development

fiscal decentralization and economic growth abstract fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped a fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth is that it remains an open question much less attention has been devoted in the literature to the indirect channels through which fiscal decentralization may affect economic growth we argue that much work remains to be done before policy advisors and decision makers can formulate and implement decentralization programs on the basis of improving the rate of economic growth

gifts of the immigrants woes of the natives lessons from the age of mass migration in this article i jointly investigate the political and the economic effects of immigration and study the causes of anti immigrant sentiments i exploit exogenous variation in european immigration to u s cities between 1910 and 1930 induced by world war i and the immigration acts of the 1920s and instrument immigrants location decision relying on pre existing settlement patterns i find that immigration triggered hostile political reactions such as the election of more conservative legislators higher support for anti immigration legislation and lower redistribution exploring the causes of natives backlash i document that immigration increased natives employment spurred industrial production and did not generate losses even among natives working in highly exposed sectors these findings suggest that opposition to immigration was unlikely to have economic roots instead i provide evidence that natives political discontent was increasing in the cultural differences between immigrants and natives results in this article indicate that even when diversity is economically beneficial it may nonetheless be socially hard to manage

on the determinants of fiscal centralization theory and evidence abstract this paper presents a simple model that unifies most of the results of the literature on fiscal federalism the model describes an economy characterized by two levels of government one public good and a private good the predictions of the model are tested by using a new set of measures of fiscal centralization the main findings are that country size income per capita ethnic fractionalization and level of democracy are negatively correlated with the degree of fiscal centralization the model is tested using ols tobit and semi parametric estimators the paper also shows that the variables included in the regression are helpful in the prediction of changes in the level of centralization

federalism and the shadow economy this paper analyzes the relationships between federalism and the shadow economy the theoretical analysis leads to the conclusion that the shadow economy is smaller in federal countries than in unitary states the mobility of individuals among competing jurisdictions leads policy makers to adopt policies that are more efficient in terms of taxation and public good provision this increases the return for activities in the formal sector relative to those in the informal one thus reducing activity in the shadow economy a cross sectional empirical analysis of a sample of 73 countries confirms this theoretical prediction

spatial fiscal interactions among french municipalities within inter municipal groups based on a unique data set of french municipalities and a large number of budgetary variables we estimate the extent of spatial fiscal interaction among the 33 484 french municipalities in 2008 by accounting for inter municipal cooperation using a spatial autoregressive model with inter municipal group fixed effects we show that spatial interactions among french municipalities are inflated by correlated effects that affect similarly municipalities that cooperate together removing these confounding effects leads to considerably smaller positive spatial interactions for tax decisions and even negative ones for capital expenditures in addition we observe a clear distinction between complementary choices on current budget items and substitutable choices on capital budget items

fiscal decentralization a political theory with latin american cases theories of fiscal federalism explain the efficiency and other economic gains from decentralization but do not explain its extent and nature in practice the authors develop a political theory of decentralization that focuses on the lines of political accountability between politicians at different levels of government the more accountable central level politicians presidents and legislators are to subnational politicians the greater the extent of decentralization and the more it will conform to the preferences of subnational politicians for example with respect to the degree of the center s discretion the model is tested on five latin american countries that although formally decentralized in fact exhibit wide differences in the distribution of spending and revenue responsibilities the theory also helps explain a number of problems governments have encountered in decentralizing including subnational debt crises and a mismatch between responsibilities and resources

federal competition and economic growth abstract this paper exploits exogenous variation in the natural topography of the united states to estimate the causal impact of inter jurisdictional competition on income growth we find that doubling the number of county governments in a metropolitan area leads to a 17 increase in the average annual growth rate of earnings per employee over 1969 2006 and a 10 increase in 2006 income per employee decomposing income effects using 2000 census worker level data we find that approximately half of the effect stems from making workers more productive while the other half comes from changing the composition of the workforce and inducing workers to work more hours we also present evidence that inter jurisdictional competition leads local governments to raise more in taxes spend more and issue more debt per capita but does not help them obtain more inter governmental transfers however the additional cost from this increase in expenditures to a median wage employee is much smaller than the increase in that employee s wages due to greater inter jurisdictional competition

hysteresis in unemployment unemployment has risen sharply in a number of countries and it appears to be becoming more persistent the experience of the 1970s and 1980s showed that adverse unemployment shocks could have long lasting effects with very serious economic and social consequences a key mechanism producing these adverse consequences was hysteresis in unemployment whereby temporary rises in unemployment generated by supply and or demand shocks had permanent or at least very persistent effects clearly it is important to understand how hysteresis mechanisms might operate in order to avoid such adverse outcomes on the other hand experience during the subsequent two decades showed that under more favourable macroeconomic conditions it is possible to observe good hysteresis effects now is a very appropriate time to re visit the issue of hysteresis in unemployment in order to avoid the errors of the 1970s and 1980s and if possible to get hysteresis effects working in a positive direction copyright 2011 oxford university press

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

decentralization fueling the fire or dampening the flames of ethnic conflict and secessionism political decentralization is widely believed to reduce ethnic conflict and secessionism in the world today yet decentralization is more successful in reducing conflict and secessionism in some countries than in others in this article i explore why this difference occurs i demonstrate using a statistical analysis of thirty democracies from 1985 to 2000 that decentralization may decrease ethnic conflict and secessionism directly by bringing the government closer to the people and increasing opportunities to participate in government but that decentralization increases ethnic conflict and secessionism indirectly by encouraging the growth of regional parties regional parties increase ethnic conflict and secessionism by reinforcing ethnic and regional identities producing legislation that favors certain groups over others and mobilizing groups to engage in ethnic conflict and secessionism earlier versions of this article were presented at harvard university and the center for the study of democratic politics at princeton university the author would like to thank sandra alfonso leon james alt micah altman barry friedman shigeo hirano simon hug gary king rose rozaghian tulia falleti and two anonymous reviewers for their very helpful comments

the economic effects of federalism and decentralization a cross country assessment this paper explores the idea that institutional details matter and that attempts to estimate the economic effects of federalism by employing a simple dummy variable neglect potentially important institutional details based on a principal component analysis seven aspects of both federalism and decentralization are used as variables for explaining differences in 1 fiscal policy 2 government effectiveness 3 economic productivity and 4 happiness the results show that institutional details do indeed matter different aspects of federalism impact on the outcome variables to different degrees this study adds to our knowledge on the transmission mechanisms of federalism and decentralization

fiscal decentralization and natural hazard risks at least to some extent due to pressure from international donors many countries have become more fiscally decentralized the underlying premise being that greater decentralization might improve the provision of local public goods and services we test this proposition by determining whether relatively more decentralized countries fare better when natural disasters strike in terms of its effects on the population overall we find evidence supporting our maintained hypothesis though the effect appears much more robust in developing countries

decentralization as a constraint to leviathan a panel cointegration analysis this paper extends the empirical literature about the effects of fiscal decentralization on the growth of government along three dimensions it distinguishes between the effects of the level of decentralization from the way local governments finance their expenditures common pool versus own resources it uses a panel cointegration approach to separate the long run effects of decentralization from the short run dynamics and it extends and revises the datasets generally used in these empirical analyses the results show that the amount of revenue raised by sub national governments leads to a long term fall in the size of government but grants have the opposite effect in addition a greater decentralization of expenditure leads to greater overall spending when the short term is considered these influences work slowly as the speed of adjustment towards the desired government size is relatively sluggish in addition in the short run there is also a clear effect from the role of local revenue raising powers that stimulates the growth of government these results appear robust to changes in the composition of the variables countries and periods included the sample

decentralization and fuel subsidies abstract this paper explores the role of decentralization in explaining variation in fuel subsidies across countries using panel data over the period 1998 2008 and for 108 countries it emerges that the effect of decentralization taken to be an increase in the number of government levels broadly decreases both diesel and gasoline subsidies with this effect being more pronounced when the level of political accountability is low for developing countries for which political accountability is low decentralization decreases gasoline and diesel subsidies by at least 6 98 and 12 99 respectively for developed countries for which political accountability is high decentralization does not have any impact on both gasoline and diesel what this evidence points to is that in developing economies where voters are poorly informed and accountability is low decentralization appears to be associated with lower fuel subsidies

worker displacement and the added worker effect this article examines the added worker effect which is the labor supply response of wives to their husbands job losses unlike past studies which focused on the husbands current unemployment status this article analyzes wives responses before and after job losses to examine the life cycle labor supply adjustments using panel study of income dynamics data reveals small predisplacement effects and large persistent postdisplacement effects the timing of the responses differs with type of displacement possibly because of differences in the information acquired before job loss long run labor supply increases compensate for over 25 of the husbands lost income

procyclical government spending a public choice analysis procyclical government spending occurs when government expenditures increase at a faster rate than income in an economic upturn but fall at a faster rate in a recession voracity effects occur when competition for increased spending proves more effective as national income increases public choice theory can be applied to describe the distribution of fiscal power across different tiers of government to shed insight into competition for intergovernmental transfers politicians have electoral incentives to press for intergovernmental transfers but they also have electoral incentives to signal their ability to manage the economy with this mix of incentives the prediction is that intergovernmental transfers will be procyclical and that sub central government spending will be more procyclical than central government spending public choice analysis of pressure for increased public spending predicts a specific pattern of cyclical government spending this pattern can be observed when analyzing government expenditures in 20 oecd countries between 1995 and 2006

hysteresis vs natural rate of unemployment new evidence for oecd countries abstract the paper tests hysteresis effects in unemployment using panel data for 19 oecd countries we apply a sequential procedure based in two multivariate augmented dickey fuller test adf type panel unit root tests in a sure framework we strongly reject the joint null of hysteresis and find that only seven countries present evidence of hysteresis

reviving leviathan fiscal federalism and the growth of government this article revisits the influential leviathan hypothesis which pos its that tax competition limits the growth of government spending in decentralized countries i use panel data to examine the effect of fiscal decentralization over time within countries attempting to distinguish between decentralization that is funded by intergovernmental transfers and local taxation first i explore the logic whereby decentralization should restrict government spending if state and local governments have wide ranging authority to set the tax base and rate especially on mobile assets in countries where this is most clearly the case decentralization is associated with smaller government second consistent with theoretical arguments drawn from wel fare economics and positive political economy i show that governments grow faster as they fund a greater portion of public expenditures through intergovernmental transfers

hysteresis in unemployment evidence from 48 u s states i introduction one central idea in macroeconomics is the equilibrium unemployment rate hypothesis 1 in many macroeconomic models which allow for some degree of price stickiness fluctuations in demand and supply may lead to deviations of the actual unemployment rate from its equilibrium value these deviations in turn trigger changes in the inflation rate there is nothing in the equilibrium unemployment rate literature which even vaguely suggests such a rate is constant indeed many studies have analyzed the factors which cause the equilibrium unemployment rate to change over time or across areas for example summers 1986 presents evidence of an increased normal u s unemployment rate since the mid 1960s and argues that this increase has in large part resulted from high and growing noncompetitive wage differentials barro 1988 addresses the issue of persistence of unemployment in various countries over a number of time periods and relates measures of persistence to variables that matter theoretically for the economy s speed of adjustment blanchard and summers 1986 1987 propose the so called hysteresis hypothesis of unemployment hysteresis is the term used to describe the long lasting influence of history on the natural rate a recession potentially has permanent effects if it changes attitudes and or characteristics of the unemployed and particularly the long term unemployed furthermore the latter may exert less pressure on the wage setting because they will become outsiders in the labor market the insiders union members or currently employed workers have much incentive to keep wages from falling 2 the hysteresis hypothesis of unemployment has important policy implications it suggests that high unemployment if left by itself may persist and continue to be a serious problem in the economy even in the long run this possibility leaves more room for active government policies to fight recessions and manage the economy the fact that the actual unemployment rate may not fluctuate around some natural rate suggests the possibility of nonstationarity in the unemployment series this relationship can be illustrated with a simple model from wyplosz 1987 or brunello 1990 consider the following phillips curve 1 mathematical expression omitted where p sub t is the current inflation rate e sub t i p sub t is the expected inflation rate of time t given information at time t 1 u sub t is the current unemployment rate mathematical expression omitted is the natural unemployment rate beta is the slope of the phillips curve and xi sub t is an error term the possibility of hysteresis arises when the natural rate is a function of past unemployment rates this can be expressed as follows 2 mathematical expression omitted where c and alpha are constants and zeta sub t is an error term substituting 2 into 1 yields 3 u sub t c alpha u sub t 1 epsilon sub t where epsilon sub t 1 beta e sub t 1 p sub t p sub t xi sub t zeta sub t hysteresis requires the parameter alpha in 3 to be equal to one 3 it implies that once disturbed the unemployment rate tends to wander around without returning to a mean value in this case the unemployment rate and also the natural rate contain a unit root in contrast when alpha is between zero and one the natural rate evolves towards its steady state level c 1 alpha and the weak version of the natural rate hypothesis holds as long as alpha is larger than zero there is persistence in unemployment rate in the sense that past unemployment affects the natural rate we however seek to test for the existence of hysteresis the extreme version of persistence finally when the parameter alpha equals zero the natural rate stays at a constant level c

bargaining coalitions and local expenditure we extend the literature on local expenditure determination by showing that bargaining and grand coalition seem to facilitate collective decision making in an assembly of elected councillors we demonstrate that the solution of the game turns on the principle of equal relative concession based on limited experimentation we assess the performance of local governments and find that group dominance frustrates local expenditure efficiency in urban localities of india

can decentralization be beneficial abstract a conventional justification for government hierarchy in the fiscal federalism literature is based upon asymmetry in policy tools or in information access that is available to different levels of government this paper demonstrates that even if these asymmetries are eliminated addition of local regional governments to a one tier central government can be strictly welfare improving

the size of countries does it matter borders are a man made institution and as such their shape cannot be taken as part of the physical landscape the size of countries is endogenous to politico economic forces this paper discusses recent efforts by economists to study three related questions what determines the evolution of the size of countries does size matter for economic success given the trend toward decentralization and of creation of supernational unions such as the eu is the meaning of national borders evolving jel h10

the informational value of unemployment statistics a note on the time series properties of participation rates abstract using a battery of unit root tests we show that labor force participation rates in australia canada and the u s are non stationary this implies that great care is needed before unemployment rates are used as measures of joblessness

the minimum wage do moderate increases in the minimum wage reduce employment if not do they nevertheless raise wages to examine these questions we apply techniques of time series analysis and systems estimation that are commonly used in macroeconomics and finance to five panels of data that contain between 11 and 34 low wage industries our answers are no and yes respectively we find that increases in the federal minimum wage between 1947 and 1997 have raised average wages in many of these industries especially the lowest wage ones the effect on employment however is mixed and typically nonsignificant even when average wages have risen

evolution over time of the determinants of preferences for redistribution and the support for the welfare state the objective of this article is to analyse the determinants of preferences for redistribution in spain both at an aggregate and regional level using country level data we put to the test the alesina and angeletos 2005 hypothesis the strong and positive relationship between the belief that luck determines income and the support for redistributive policies as an innovative contribution we contrast this hypothesis using a set of panel data models with regional and time fixed effects our main finding is the existence of a structural change in preferences formation for redistribution in spain between 1995 and 2007 furthermore the empirical results provide some evidence suggesting that 1 the belief that society is unfair have a moderate effect on the individuals preferences for redistribution and 2 regional beliefs in spanish regions are not equally important when determining demand for redistribution

baby booms and drug busts trends in youth drug use in the united states 1975 2000 are there agglomeration economies in crime the positive correlation between city size and crime rates is well known this paper establishes a positive relationship between youth cohort size and marijuana use rates it further demonstrates a negative association between youth cohort size and marijuana prices youth drug possession arrest rates and both overall and youth sales arrest rates cohort size affects demand by lowering possession arrest probabilities but this factor explains less than 10 percent of the relationship the main effect shown here accounting for at least a quarter of the relationship is on the supply of marijuana larger youth cohorts yield thicker drug markets that through lower sales arrest risk and informational economies generate cost savings in drug distribution

some empirical evidence on the discouraged worker effect abstract this note produces empirical evidence on the existence of a significant discouraged worker effect in us data namely on the tendency for groups of secondary workers to move in and out of the labor force with the business cycle looking for jobs when these are available while giving up job search during recessions by focusing on the behavior of the not in the labor force series as well as of two of its segments going to school and keeping house at the business cycle frequencies both in the aggregate and for a number of age sex groups the series display a clear counter cyclical pattern thus lending support to the discouraged worker notion

togetheror separately issues on the costs and benefits of political and fiscal unions abstract around the world one observes a tendency toward political separatism the economic literature generally but not always emphasizes several benefits of large fiscal and therefore political jurisdictions in this paper we discuss several politico economic arguments which reconcile this tension between normative economic models and empirical observations

determinants of expenditure decentralization evidence from china summary this study is the first attempt to examine the determinants of expenditure decentralization at sub provincial levels in china the chinese central government gives detailed guidelines to local governments on public finance but ironically their expenditure assignment is far from being well regulated differences in fiscal decentralization on the expenditure side are enormous among local governments employing a panel dataset of 1995 2006 we provide empirical evidence that transfer dependency negatively affects expenditure decentralization in chinese local governments it suggests that intermediate governments i e provincial governments may have grabbed central grants for self interests

the global crisis and intergovernmental relations centralization versus decentralization 10 years on there is a growing empirical literature on the effects of the global financial and economic crisis on intergovernmental relations this paper contributes to this literature by focusing on conventio

on the number and size of nations this paper studies the equilibrium determination of the number of countries in different political regimes and in different economic environments with more or less economic integration we focus on the trade off between the benefits of large jurisdictions and the costs of heterogeneity of large and diverse populations our model implies that i democratization leads to secessions ii in equilibrium one generally observes an inefficiently large number of countries iii the equilibrium number of countries is increasing in the amount of economic integration

regional inequalities fiscal decentralization and government quality abstractregional inequalities fiscal decentralization and government quality regional studies there are theoretical arguments supporting the view that regional income inequalities the degree of fiscal decentralization and the quality of government are simultaneously determined this article argues that existing empirical work has failed to deal adequately with this possibility in light of this it applies a simultaneous equation model which accounts for the joint determination of these three variables to a panel of 23 organisation for economic co operation and development oecd countries the empirical evidence that emerges from the analysis suggests that a process of fiscal decentralization accompanied by measures to improve the quality of government would be an effective strategy for reducing regional inequalities

searching for leviathan an empirical study in several papers and a recent book geoffrey brennan and james buchanan 1977 1978 1980 have put forth a striking and controversial view of the public sector drawing by analogy on the conventional theory of monopoly in the private sector they envision a monolithic government that systematically seeks to exploit its citizenry through the maximization of the tax revenues that it extracts from the economy from this perspective they develop a fiscal constitution whose central purpose is to constrain leviathan by limiting in various ways its access to tax and other fiscal instruments while the leviathan hypothesis has been the source of lively debate and a wide range of policy proposals it has not been the subject of much systematic empirical work or testing this is a matter of some importance since the policy implications of the leviathan view are disturbing to put it mildly in particular brennan and buchanan virtually stand on their heads many of the basic theorems in public finance for an efficient and equitable tax system if in fact the leviathan view is an inaccurate depiction of the functioning of the public sector the introduction of their policy proposals is likely to make a sorry mess of the fiscal system the leviathan model does however have some straightforward implications for observable fiscal behavior it is the purpose of this paper to examine one of these testable implications brennan and buchanan stress that fiscal decentralization is itself a powerful constraint on leviathan competition among governments in the context of the interjurisdictional mobility of persons in pursuit of fiscal gains can offer partial or possibly complete substitutes for explicit fiscal constraints on the taxing power 1980 p 184 such competition among governments in a federal system that places heavy reliance on local fiscal decisions will greatly limit the capacity of leviathan to channel resources into the public sector in short as indicated by the epigraph to this paper the leviathan model implies that other things equal the size of the public sector should vary inversely with the extent of fiscal decentralization 2

labor force participation rates and the informational value of unemployment rates evidence from disaggregated us data the informational value of the aggregate us unemployment rate has recently been questioned because of a unit root in the labor force participation rate the lack of mean reversion implies that long