Decentralization of the Size and Scope of Local Governments and Corruption

Working Papers CEB from Universite Libre de Bruxelles, No 10-031

Posted: 30 Sep 2014

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Michael A. Nelson

University of Akron - Department of Economics

Date Written: May 2010

Abstract

This research adds to the literature on the nexus between government and corruption by examining further the influence of government decentralization on corruption. Previous research has focused primarily on fiscal decentralization. We bring additional evidence to bear for the United States by addressing whether the structure of local governments – measured both in terms of the scope of services offered and the size of the population served – has a bearing on corruption within the state. Results show that government decentralization does not necessarily reduce corruption – the type of decentralization matters. Specifically, we find that more general-purpose governments consistently contribute to corruption. In contrast, the effect of special-purpose governments on corruption is mixed. The findings uniquely flush out the tension between fiscal decentralization and fragmental local government structures in terms of impacts on corruption. Beyond this, we find that the influences of various government enforcement agencies on corruption, including police, judiciary and corrections, vary. Other corruption determinants generally support the literature. Policy implications are discussed.

Keywords: Corruption; Fiscal decentralization; Local government fragmentation; Special-purpose government; General-purpose government

JEL Classification: H73; H11

Suggested Citation

Goel, Rajeev K. and Nelson, Michael A., Decentralization of the Size and Scope of Local Governments and Corruption (May 2010). Working Papers CEB from Universite Libre de Bruxelles, No 10-031. Available at SSRN: https://ssrn.com/abstract=2502972

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Michael A. Nelson

University of Akron - Department of Economics ( email )

Akron, OH 44325
United States
330-972-7939 (Phone)
330-972-5356 (Fax)

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