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Scientific article
English

Bureaucracy and the flypaper effect: Evidence from intercommunal fiscal equalisation in the canton of Vaud

Published inUrban public economics review, no. 18, p. 38-67
Publication date2013
Abstract

Unlike classical theoretical expectations, our empirical study shows that financial transfers to decentralised governments increase local public expenditures much more than would be triggered by an equivalent rise in local income. This empirical evidence of the presence of a flypaper effect is achieved using panel data from 375 municipalities located in the Swiss canton of Vaud covering the period 1994 to 2005. During that time there was a major change in the financial equalisation scheme. Furthermore, our study confirms the analysis of the public choice theory: the effect depends partly on the degree of complexity of the municipal bureaucracy. These results show that local bureaucratic behaviour may impede the effectiveness of a financial equalisation scheme that aims to reduce disparities in local tax.

Keywords
  • Intergovernmental grants
  • Flypaper effect
  • Subnational governments
  • Bureaucracy behaviour
  • Fiscal federalism
Citation (ISO format)
CAPPELLETTI, Fabio, SOGUEL, Nils. Bureaucracy and the flypaper effect: Evidence from intercommunal fiscal equalisation in the canton of Vaud. In: Urban public economics review, 2013, n° 18, p. 38–67.
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Article (Published version)
accessLevelRestricted
Identifiers
  • PID : unige:34907
ISSN of the journal1697-6223
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