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

77 Pages Posted: 25 Jun 2019 Last revised: 22 Oct 2021

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

Multiple version iconThere are 2 versions of this paper

Date Written: January 22, 2021

Abstract

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

Keywords: fiscal decentralization, female labor supply, childcare, 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 (January 22, 2021). 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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National Bureau of Economic Research (NBER)

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Michela Giorcelli

University of California - Los Angeles ( email )

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

National Bureau of Economic Research (NBER) ( email )

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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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