In government we trust: The role of fiscal decentralization

This paper looks whether fiscal decentralization is associated with trust of citizens in government related institutions. We expect a positive relationship based on the argument of governments' improved responsiveness to preferences of citizens that is perceived to result from more decentralize...

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Bibliographic Details
Published inEuropean Journal of Political Economy Vol. 37; pp. 116 - 128
Main Authors Ligthart, Jenny E., van Oudheusden, Peter
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.03.2015
Subjects
Fiscal decentralization
Subsidiarity principle
Trust in government
Subsidiarity principle
H11
H77
Fiscal decentralization
H72
Trust in government
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Summary:This paper looks whether fiscal decentralization is associated with trust of citizens in government related institutions. We expect a positive relationship based on the argument of governments' improved responsiveness to preferences of citizens that is perceived to result from more decentralized fiscal systems. Survey data from up to 42 countries over the period 1994–2007 confirm this positive relationship. It is robust to controlling for unobserved country heterogeneity and a wide array of other explanatory variables that are associated with trust in government related institutions. Moreover, we do not find that the positive association with fiscal decentralization extends to other, non-government related institutions. •We find fiscal decentralization and trust in government to be positively related.•The positive association does not extend to non-government related institutions.•Results lend support to using the subsidiarity principle in theoretical frameworks.
ISSN:0176-2680
1873-5703
DOI:10.1016/j.ejpoleco.2014.11.005