Maria Rosaria Alfano
Anna Laura Baraldi
Claudia Cantabene

the effect of fiscal decentralization on corruption: a non-linear hypothesis

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.

Data and Resources

Suggested Citation

Alfano, Maria Rosaria; Baraldi, Anna Laura; Cantabene, Claudia (2018): The Effect of Fiscal Decentralization on Corruption: A Non-linear Hypothesis. Version: 1. German Economic Review. Dataset.