Redistributing Income Under Fiscal Vertical Imbalance
نویسندگان
چکیده
From the literature on decentralization, it appears that the scal vertical imbalance is somehow inherent to multi-level governments. Using a stylized model we show that this leads to a reduction in the extent of redistributive scal policies if the maximal tolerable size of government has been reached. To test for this empirically we use some high quality data, from the LIS dataset, on individual incomes. The results are highly signi cant and point in the direction of our theoretical predictions. JEL Classi cation: H11, H77, I38
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