Skip to main content

Advertisement

SpringerLink
Log in

Government fragmentation versus fiscal decentralization and corruption

  • Published:
Public Choice Aims and scope Submit manuscript

Abstract

This research examines the influence of government decentralization on corruption in the United States. Previous research has focused primarily on fiscal decentralization. We address whether the structure of local governments—measured in terms of the scope of services offered and the population served—has a bearing on corruption. Results show that government decentralization does not necessarily reduce corruption—the type of decentralization matters. Specifically, more general-purpose governments contribute to corruption. In contrast, the effect of special-purpose governments is mixed. The findings uniquely reveal the tension between fiscal decentralization and fragmented local governments in terms of impacts on corruption.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Aidt, T. S. (2003). Economic analysis of corruption: a survey. Economic Journal, 113, F632–F652.

    Article  Google Scholar 

  • Arikan, G. G. (2004). Fiscal decentralization: a remedy for corruption? International Tax and Public Finance, 11, 175–195.

    Article  Google Scholar 

  • Arzaghi, M., & Henderson, J. V. (2005). Why countries are fiscally decentralizing. Journal of Public Economics, 89, 1157–1189.

    Article  Google Scholar 

  • Banerjee, A. V. (1997). A theory of misgovernance. Quarterly Journal of Economics, 112, 1289–1332.

    Article  Google Scholar 

  • Bardhan, P., & Mookherjee, D. (2006). Decentralization, corruption and government accountability. In S. Rose-Ackerman (Ed.), International handbook on the economics of corruption (pp. 161–188). Cheltenham: Edward Elgar.

    Google Scholar 

  • Basu, K., Bhattacharya, S., & Mishra, A. (1992). Notes on bribery and the control of corruption. Journal of Public Economics, 48, 349–359.

    Article  Google Scholar 

  • Becker, G. S. (1968). Crime and punishment: an economic approach. Journal of Political Economy, 76, 169–217.

    Article  Google Scholar 

  • Becker, G. S., & Stigler, G. J. (1974). Law enforcement, malfeasance and the compensation of enforcers. Journal of Legal Studies, 3, 1–19.

    Article  Google Scholar 

  • Brennan, G., & Buchanan, J. M. (1980). The power to tax. New York: Cambridge University Press.

    Google Scholar 

  • Brueckner, J. (2000). Fiscal decentralization in developing countries: the effects of local corruption and tax evasion. Annals of Economics and Finance, 1, 1–18.

    Google Scholar 

  • Carr, J. B., & Feiock, R. C. (Eds.) (2004). City-county consolidation and its alternatives: reshaping the local government landscape. New York: M.E. Sharpe.

    Google Scholar 

  • Corporate Crime Reporter (2004). Public corruption in the United States. January 16, 2004. Available at http://www.corporatecrimereporter.com/corruptreport.pdf.

  • Fisher, R. C., & Wassmer, R. W. (1998). Economic influences on the structure of local government in U.S. metropolitan areas. Journal of Urban Economics, 43, 444–471.

    Article  Google Scholar 

  • Fisman, R., & Gatti, R. (2002a). Decentralization and corruption: evidence across countries. Journal of Public Economics, 83, 325–345.

    Article  Google Scholar 

  • Fisman, R., & Gatti, R. (2002b). Decentralization and corruption: evidence from U.S. Federal Transfer Programs. Public Choice, 113, 25–35.

    Article  Google Scholar 

  • Glaeser, E. L., & Saks, R. E. (2006). Corruption in America. Journal of Public Economics, 90, 1053–1072.

    Article  Google Scholar 

  • Goel, R. K., & Nelson, M. A. (1998). Corruption and government size: a disaggregated analysis. Public Choice, 97, 107–120.

    Article  Google Scholar 

  • Goel, R. K., & Nelson, M. A. (2007). Are corrupt acts contagious? Evidence from the United States. Journal of Policy Modeling, 29, 839–850.

    Article  Google Scholar 

  • Goel, R. K., & Nelson, M. A. (2010). Causes of corruption: history, geography and government. Journal of Policy Modeling (forthcoming).

  • Goel, R. K., & Rich, D. P. (1989). On the economic incentives for taking bribes. Public Choice, 61, 269–275.

    Article  Google Scholar 

  • Guriev, S. (2004). Red tape and corruption. Journal of Development Economics, 73, 489–504.

    Article  Google Scholar 

  • Jain, A. K. (2001). Corruption: a review. Journal of Economic Surveys, 15, 71–121.

    Article  Google Scholar 

  • Klitgaard, R. (1988). Controlling corruption. Berkeley: University of California Press.

    Google Scholar 

  • Lambsdorff, J. G. (2006). Causes and consequences of corruption: what do we know from a cross-section of countries? In S. Rose-Ackerman (Ed.), International handbook on the economics of corruption (pp. 3–51). Cheltenham: Edward Elgar.

    Google Scholar 

  • Lambsdorff, J. G., & Teksoz, S. U. (2004). Corrupt relational contracting. In J. G. Lambsdorff, M. Schramm, & M. Taube (Eds.), The new institutional economics of corruption (pp. 138–151). New York: Rutledge.

    Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1999). The quality of government. Journal of Law, Economics, and Organization, 15, 222–279.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Pop-Eleches, C., & Shleifer, A. (2004). Judicial checks and balances. Journal of Political Economy, 112, 445–470.

    Article  Google Scholar 

  • Meier, K. J., & Holbrook, T. M. (1992). “I Seen my Opportunities and I took ’em:” political corruption in the American states. Journal of Politics, 54, 135–155.

    Article  Google Scholar 

  • Mookherjee, D., & Png, I. (1995). Corruptible law enforcers: how should they be compensated? Economic Journal, 105, 145–159.

    Article  Google Scholar 

  • Murphy, R. L., Libonatti, O., & Salinardi, M. (1995). Overview and comparison of fiscal decentralization experiences. In R. L. Murphy (Ed.), Fiscal decentralization in Latin America (pp. 1–57). Washington: Inter-American Development Bank.

    Google Scholar 

  • Nelson, M. A. (1990). Decentralization of the subnational public sector: an empirical analysis of the determinants of local government structure in metropolitan areas in the US. Southern Economic Journal, 57, 443–457.

    Article  Google Scholar 

  • Oates, W. E. (1999). An essay on fiscal federalism. Journal of Economic Literature, 37, 1120–1149.

    Article  Google Scholar 

  • Paldam, M. (2002). The cross-country pattern of corruption: economics, culture and the seesaw dynamics. European Journal of Political Economy, 18, 215–240.

    Article  Google Scholar 

  • Persson, T., & Tabellini, G. (2000). Political economics—explaining public policy. Cambridge: MIT Press.

    Google Scholar 

  • Priks, M. (2007). Judiciaries in corrupt societies. CESifo working paper #2008.

  • Prud’homme, R. (1995). The dangers of decentralization. The World Bank Research Observer 10.

  • Rose-Ackerman, S. (1978). Corruption: a study in political economy. New York: Academic Press.

    Google Scholar 

  • Rose-Ackerman, S. (1999). Corruption and government. Cambridge: Cambridge University Press.

    Google Scholar 

  • Rosen, H. S. (1995). Public finance. Chicago: Irwin.

    Google Scholar 

  • Serra, D. (2006). Empirical determinants of corruption: a sensitivity analysis. Public Choice, 126, 225–256.

    Article  Google Scholar 

  • Shah, A. (2006). Corruption and decentralized public governance. World Bank Policy Research working paper #3824, January.

  • Shleifer, A., & Vishny, R. W. (1993). Corruption. Quarterly Journal of Economics, 108, 599–617.

    Article  Google Scholar 

  • Shleifer, A., & Vishny, R. W. (1999). The grabbing hand. Cambridge: Harvard University Press.

    Google Scholar 

  • Svensson, J. (2005). Eight questions about corruption. Journal of Economic Perspectives, 19, 19–42.

    Article  Google Scholar 

  • Tanzi, V. (1994). Corruption, governmental activities, and markets. IMF Working Paper.

  • Tanzi, V. (1996). Fiscal federalism and decentralization: a review of some efficiency and macroeconomic aspects. In M. Bruno & B. Pleskovic (Eds.), Annual World Bank conference on development economics 1995 (pp. 295–330). Washington: The World Bank.

    Google Scholar 

  • Treisman, D. (2000). The causes of corruption: a cross-national study. Journal of Public Economics, 76, 399–458.

    Article  Google Scholar 

  • Treisman, D. (2002a). Decentralization and the quality of government. Unpublished paper. Los Angeles: University of California. http://www.sscnet.ucla.edu/polisci/faculty/treisman/defin.pdf/.

    Google Scholar 

  • Treisman, D. (2002b). Defining and measuring decentralization: a global perspective. Unpublished paper. Los Angeles: University of California. http://www.sscnet.ucla.edu/polisci/faculty/treisman/DecandGovt.pdf.

    Google Scholar 

  • Treisman, D. (2007). What have we learned about the causes of corruption from ten years of cross-national empirical research? Annual Review of Political Science, 10, 211–244.

    Article  Google Scholar 

  • U.S. Department of Justice (1989, 1999, 2007). Public Integrity Section Criminal Division. Report to Congress on the activities and operations of the Public Integrity Section.

  • World Bank (1999). Decentralization: rethinking government. In World development report 1999/2000: entering the 21st century (pp. 107–124). New York: Oxford University Press.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, Illinois State University, Normal, IL, 61790-4200, USA

    Rajeev K. Goel

  2. Department of Economics, University of Akron, Akron, OH, 44325, USA

    Michael A. Nelson

Authors
  1. Rajeev K. Goel
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Michael A. Nelson
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rajeev K. Goel.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Goel, R.K., Nelson, M.A. Government fragmentation versus fiscal decentralization and corruption. Public Choice 148, 471–490 (2011). https://doi.org/10.1007/s11127-010-9666-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11127-010-9666-x

Keywords

JEL Classification

Search

Navigation