Devolution can have incongruous effects on equality. Decentralisation of powers and resources to lower tiers of government can either increase or reduce interpersonal inequalities, depending on characteristics of the devolved region. This column uses data from regions of Western Europe to show that greater fiscal decentralisation is associated with lower income inequality. VOXLet's look with some detail an find out what conditions are required.
We use a moderated multiple regression analysis to examine whether regional per-capita income intervenes in the relationship between fiscal and political decentralisation and income inequality within regions. In other words, we examine whether the magnitude of this relation varies across different development levels and then plot the relationship between decentralisation and income inequality at high and low levels of regional per-capita income.
And they find that advanced economies gain from decentralized government. If this is true, then the Delong consensus of whining for DC to deliver stimulus from 3,000 miles away is unlikely to help make California any better.
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