Doctoral thesis

Three essays in applied economics


81 p

Thèse de doctorat: Università della Svizzera italiana, 2014

English In the last two decades many countries have proposed structural reforms to decentralize public tasks as well as policy decisions to sub-central jurisdictions. The aim of these reforms, accordingly with the common theoretical arguments, was to produce beneficial effects such as an improved matching between citizens' preferences and policy adoption, an increase in politicians' accountability and a more efficient selection of good officials. Interestingly, these changes have been put in place in both developed countries (e.g., Italy and Spain) and developing countries (e.g., Brazil and South Africa). As a direct consequence, local authorities have assumed an important role in the policy arena given the increased power to impact effectively citizens' welfare. As additional result, these reforms have produced in several countries a condition of partial decentralization, where both lower and upper level jurisdictions are put in a position to affect the final policy decisions. These two effects together draw to evaluations of policies that need to consider more carefully the hierarchical structure of the decision-making process and highlight the existence of potential vertical interactions between governments. This thesis aims at giving a substantial contribution in that direction by studying some of the economical issues that affect local governments policies, taking into account the multi- tiered decision-making system which is nowadays present in many federations and decentralized countries. To do so I provide in my thesis three empirical applications. The first two chapters focus on the effect of direct democratic institutions respectively on local expenditure and expenditure decentralization. They both can be considered part of the recently growing literature often called second generation theory of fiscal federalism, where political incentives are crucial to describe fiscal outcomes in federal systems. Instead, the third chapter deals with the effect of taxation on firms' location choices by emphasizing the role that reforms occurred at the state level might have on local economies.
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