The effects of fiscal decentralisation on publicly provided services and labour markets Nicola Bianchi, Michela Giorcelli and Enrica Maria Martino
By: Bianchi, Nicola
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Contributor(s): Giorcelli, Michela | Martino, Enrica Maria.
Material type: 
ArticleSubject(s): DESCENTRALIZACION FISCAL | FEDERALISMO FISCAL | SERVICIOS PUBLICOS | MERCADO DE TRABAJO
In:
The Economic Journal v. 133, n. 653, July 2023, p. 1738-1772Summary: This paper studies how fiscal decentralisation affects labour supply. It explores a 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 decentralisation that stems from differences in the average age of buildings caused by World War II bombings. Decentralisation expanded municipal services, such as nursery schools, especially in areas with greater political competition. The paper then investigates how the reform affected labour markets. Decentralisation increased female labour supply—probably through expanded availability of nursery schools—thereby reducing the gender gap in employment.
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| OP 282/2023/652 The Economic Journal | OP 282/2023/652-1 Optimal fiscal consolidation under frictional financial markets | OP 282/2023/653 The Economic Journal | OP 282/2023/653-1 The effects of fiscal decentralisation on publicly provided services and labour markets | OP 282/2023/653-2 Production networks and international fiscal spillovers | OP 282/2023/653-3 Tax revenues in low-income countries | OP 282/2023/654 The Economic Journal |
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This paper studies how fiscal decentralisation affects labour supply. It explores a 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 decentralisation that stems from differences in the average age of buildings caused by World War II bombings. Decentralisation expanded municipal services, such as nursery schools, especially in areas with greater political competition. The paper then investigates how the reform affected labour markets. Decentralisation increased female labour supply—probably through expanded availability of nursery schools—thereby reducing the gender gap in employment.
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