Template-type: ReDIF-Paper 1.0

Author-Name: Luis Ayala
Author-Workplace-Name: Facultad de Ciencias Jurídicas y Sociales, Universidad Rey Juan Carlos, Spain
Author-Workplace-Email: luis.ayala@urjc.es

Author-Name: Ana Herrero
Author-Workplace-Name: Facultad de Derecho, UNED, Spain
Author-Workplace-Email: aherrero@cee.uned.es

Author-Name: Jorge Martinez-Vazquez
Author-Workplace-Name: International Center for Public Policy, Georgia State University, USA
Author-Workplace-Email: jorgemartinez@gsu.edu

Title: Welfare Benefits in Highly Decentralized Fiscal Systems:
Evidence on Interterritorial Mimicking

Abstract: This paper analyzes the determinants of welfare benefit levels within a highly fiscally decentralized context. More specifically, we analyze the role of mimicking as a driver of the institutional design of subnational government policies in the absence of federal co-ordination and financing. Empirically we focus on the welfare benefit programs of Spanish regional governments during the period 1996-2015. Our results strongly support the significant role played by mimicking: regional public agents observe what their peers are doing and act accordingly, and this takes place even in a context of low mobility of households. Moreover, we find evidence of vertical externalities: even in a completely decentralized framework, regions consider the benefits set by the central government as a benchmark when determining their own welfare benefit levels.
Length: 36 pages

Creation-Date: 2019-04

File-URL: https://icepp.gsu.edu/files/2019/04/paper1905.pdf
File-Format: application/pdf

Handle: RePEc:ays:ispwps:paper1905