This study advances the literature on the effect of decentralization on corruption by proposing a theoretical motivation for the hypothesis that the corruption-minimizing decentralization arrangement prescribes intermediate decentralization degrees: a ‘middle’ decision-making power of local governors may mitigate the trade-off between the rent-seeking incentive for local politicians and the effectiveness of their voters’ monitoring. The estimation of a non-linear empirical model strongly confirms that a decentralization degree between 15% and 21% minimizes corruption even through different estimation procedures, introduction of control variables, and the use of internal and external IV and of alternative decentralization and corruption measurements.
The Effect of Fiscal Decentralization on Corruption: A Non-linear Hypothesis
Maria Rosaria Alfano;Anna Laura Baraldi
;Claudia Cantabene
2018
Abstract
This study advances the literature on the effect of decentralization on corruption by proposing a theoretical motivation for the hypothesis that the corruption-minimizing decentralization arrangement prescribes intermediate decentralization degrees: a ‘middle’ decision-making power of local governors may mitigate the trade-off between the rent-seeking incentive for local politicians and the effectiveness of their voters’ monitoring. The estimation of a non-linear empirical model strongly confirms that a decentralization degree between 15% and 21% minimizes corruption even through different estimation procedures, introduction of control variables, and the use of internal and external IV and of alternative decentralization and corruption measurements.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
