In Government We Trust: The Role of Fiscal Decentralization

CentER Working Paper Series No. 2011-073

45 Pages Posted: 16 Jun 2011

See all articles by Jenny E. Ligthart

Jenny E. Ligthart

Tilburg University - CentER, Department of Economics; University of Groningen - Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Peter van Oudheusden

World Bank - Development Research Group (DECRG)

Date Written: June 16, 2011

Abstract

We measure the contribution of fiscal decentralization to trust in government. Using repeated cross-country survey data of individuals on several measures of trust in government over the 1994-2007 period, we estimate an ordered response model of the government trust and fiscal decentralization nexus. We control for unobserved country characteristics, macroeconomic determinants, and individual characteristics. Our main finding is that fiscal decentralization increases trust in government. More specifically, a one percentage point increase in fiscal decentralization causes roughly a four-fifths of a percentage point increase in government trust. The beneficial effect of fiscal decentralization on trust in government is neither limited to nor necessarily large for relatively decentralized countries.

Keywords: fiscal decentralization, government trust, social capital

JEL Classification: D70, H11, H70, H72

Suggested Citation

Ligthart, Jenny E. and van Oudheusden, Peter, In Government We Trust: The Role of Fiscal Decentralization (June 16, 2011). CentER Working Paper Series No. 2011-073. Available at SSRN: https://ssrn.com/abstract=1865728 or http://dx.doi.org/10.2139/ssrn.1865728

Jenny E. Ligthart (Contact Author)

Tilburg University - CentER, Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 8755 (Phone)
+31 13 466 4032 (Fax)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Peter Van Oudheusden

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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