The Effects of Fiscal Decentralization on Publicly Provided Services and Labor Markets

65 Pages Posted: 25 Jun 2019 Last revised: 13 Jan 2020

See all articles by Nicola Bianchi

Nicola Bianchi

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Michela Giorcelli

University of California - Los Angeles; National Bureau of Economic Research (NBER)

Enrica Maria Martino

National Institute of Demographic Studies (INED); CHILD - Collegio Carlo Alberto

Date Written: September 3, 2019

Abstract

This paper studies how fiscal decentralization affects the provision of local services. It exploits a 1993 reform that increased the fiscal autonomy of Italian municipalities by replacing government transfers with revenues from a new local property tax. The identification leverages cross-municipal variation in the degree of decentralization that stems from Allied bombings during WWII. Decentralization reduced overall spending but expanded municipal services, such as nursery schools. These effects are larger in areas with higher political competition. The paper also investigates how the reform affected the labor markets. Decentralization, likely through expanded nursery schools, increased female labor supply, reducing the gender gap in employment.

Keywords: fiscal decentralization, female labor supply, child care, nursery schools, local property tax

JEL Classification: H71, H75, J20, H77, I21

Suggested Citation

Bianchi, Nicola and Giorcelli, Michela and Martino, Enrica Maria, The Effects of Fiscal Decentralization on Publicly Provided Services and Labor Markets (September 3, 2019). Available at SSRN: https://ssrn.com/abstract=3407825 or http://dx.doi.org/10.2139/ssrn.3407825

Nicola Bianchi (Contact Author)

Northwestern University - Kellogg School of Management ( email )

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Evanston, IL 60208
United States

HOME PAGE: http://www.bianchinicola.com

National Bureau of Economic Research (NBER)

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Michela Giorcelli

University of California - Los Angeles ( email )

9262 Bunche Hall
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Los Angeles, CA CA 90024
United States
650-630-9648 (Phone)

HOME PAGE: http://www.giorcellimichela.com

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

HOME PAGE: http://www.giorcellimichela.com

Enrica Maria Martino

National Institute of Demographic Studies (INED) ( email )

133 Bd Davout
Paris cedex 20, France 75980
France

CHILD - Collegio Carlo Alberto ( email )

Turin
Italy

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