Center for Policy Research
Property Tax Web Series
The Effects of Fiscal Decentralization on Publicly Provided Services and Labor Market
Nicola Bianchi, Michela Giorcelli, and Enrica Maria Martino
October 2022
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Abstract
This paper studies how fiscal decentralization affects local services. It explores a 1993 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 decentralization that stems from differences in the average age of buildings caused by bombings during WWII. Decentralization reduced local spending but expanded municipal services, such as nursery schools. These effects are larger in areas with greater political competition. The paper also investigates how the reform affected labor markets. Decentralization increased female labor supply - probably through expanded availability of nursery schools - thereby reducing the gender gap in employment.
This paper was presented by Nicola Bianchi (Northwestern University) on October 21, 2022 as part of the 2022-2023 Syracuse-Chicago Webinar Series on Property Tax Administration and Design. John Yinger (Syracuse University) was the discussant for this presentation. Yinger comments on Bianchi's "The Effects of Fiscal Decentralization on Publicly Provided Services and Labor Market."
This Syracuse-Chicago Webinar Series on Property Tax Administration and Design aims to gather insight and scholarship through domestic and international comparative studies with common threads to help reform and improve property tax administration and design in the U.S. and other countries facing similar problems.
For questions about the webinars, please contact Zia Jackson. For questions about this paper, please contact the author or authors.