Decentralisation and income inequality in Central and Eastern European countries

This paper provides empirical evidence for the association between fiscal decentralisation and income distribution for a panel of 11 economies from Central and Eastern Europe (CEE) during 1992-2016. We focus on three research topics: the effect of decentralisation on income inequality; the effects o...

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Bibliographic Details
Published in:Post-communist economies 2019-01, Vol.31 (1), p.123-136
Main Authors: Makreshanska-Mladenovska, Suzana, Petrevski, Goran
Format: Article
Language:English
Subjects:
Central and Eastern Europe
Decentralization
Finance
Fiscal decentralisation
fiscal transfers
Hypotheses
Income distribution
Income inequality
inequality
Longitudinal studies
panel data models
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Summary:This paper provides empirical evidence for the association between fiscal decentralisation and income distribution for a panel of 11 economies from Central and Eastern Europe (CEE) during 1992-2016. We focus on three research topics: the effect of decentralisation on income inequality; the effects of the structure of subnational government finance on income inequality; and the validity of the Kuznets hypothesis. The main findings from the empirical exercise are as follows: first, we provide firm evidence on the presumed favourable effects of fiscal decentralisation on income distribution in the CEE countries; second, our empirical model suggests that the effects of fiscal decentralisation on income inequality are dependent on the source of finance of subnational governments, i.e. intergovernmental transfers may have a role in income equalisation; third, we cannot confirm the validity of the Kuznets hypothesis in CEE countries.
ISSN:1463-1377
1465-3958
DOI:10.1080/14631377.2018.1461526