319 research outputs found

    Property taxation as incentive for cost control: Empirical evidence for utility services in Norway

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    Cost control in the public sector is a challenge for political institutions. Theoretical research recently has shown incentive effects of property taxation that can work as a mechanism to hold costs down. We are able to investigate the empirical relevance of this proposition, since local governments in Norway represent a kind of natural experiment where about 30% of them have residential property tax. The framework of the analysis is a bureau producing public services for the local government, and control of slack is related to the budget constraint of the bureau. High costs are understood as the result of an agency problem. In a stylized model of this interaction, we show that property taxation increases the local government budget responsiveness to higher costs if housing demand is not ‘too’ elastic. Both complimentarity between service supply and housing demand and migration equilibrium contribute to the negative relationship hypothesized between the property tax base and the reported costs of the bureau. The econometric analysis confirms significant differences in unit costs dependent on tax structure. Existence of property taxation seems to help overcome the agency problem and reduce costs. The potential problems of endogeneity of the choice of property taxation and unequal comparisons are handled with instrument variables and matching.

    Efficiency potential and determinants of efficiency: An analysis of the care of elderly sector in Norway

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    The paper provides an analysis of efficiency in the care for the elderly sector in Norway. In a first step we perform DEA analysis to calculate the degree of efficiency in each municipality and the national level efficiency potential. The analysis reveals substantial variation in efficiency across municipalities, and the national level efficiency potential is calculated to 10%. Tobit regressions and recently developed bootstrap methods are applied in a second stage to explain the variation in efficiency. The second stage analyses indicate that high fiscal capacity, a low degree of user charge financing, and a fragmented local council are associated with low efficiency.

    Income Distribution and Tax Structure: Microeconomic Test of the Meltzer-Richard Hypothesis

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    The tax structure is important for the income distribution and therefore a key playground for redistributive politics. The standard theory assumes that more unequal income distribution will create a majority for more redistribution (Meltzer and Richard). This study investigates the empirical validity of this relationship in a microeconomic study of the tax structure in decentralized government in Norway. The choice of revenue instruments studied involves user charges and property taxes oriented towards housing. While user charges act as head taxes, property taxes have distributive consequences. The approach is in the tradition of majority rule, and we show how the local government decisions regarding tax structure and spending level can be understood as one-dimensional. This motivates the empirical analysis where the actual income distribution is measured by the ratio of median to mean income. The estimated model confirms that more equal income distribution implies a shift in the tax burden from property taxes to user charges.

    Myopic or constrained by balanced-budget-rules? The intertemporal spending behavior of Norwegian local governments

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    The paper analyzes the intertemporal spending behavior of Norwegian local governments with particular attention to liquidity constraints imposed by balanced-budget-rules (BBRs). The main findings are: (i) On average, local government spending behavior is neither perfectly forward looking nor fully myopic. (ii) Local governments with good fiscal conditions behave more forward looking than other local governments. (iii) A high degree of party fragmentations is associated with less forward looking behavior. The overall assessment is that the departure from rational forward looking behavior reflects both liquidity constraints imposed by BBRs and myopic behavior.Balanced-budget-rules; Intertemporal spending behavior; Consumption smoothing; Local government

    Public Employment and Regional Risk Sharing: Norway 1977-90

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    We provide an empirical analysis of regional risk sharing in Norway over the period 1977-90. The approach of Asdrubali, Sørensen and Yosha (1996) is extended to take account of public employment as a possible shock absorber. The other channels of risk sharing are capital markets & commuting, taxes & transfers and credit markets. Surprisingly, there seems to be full interregional risk sharing in the short run, with public employment absorbing about 20 % of regional shocks to private output. The combined effect of capital markets & commuting is even more important, however, absorbing up to 70 % of regional shocks. In the longer run, a significant fraction of regional shocks remain unsmoothed. Government smoothing increases and market based smoothing decreases as shocks become more permanent.

    Efficiency Potential and Efficiency Variation in Norwegian Lower Secondary Schools

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    The paper performs an efficiency analysis of the lower secondary school sector in Norway. The efficiency potential is calculated to 14 percent based on a DEA analysis with grades in core subjects (adjusted for student characteristics and family background) as outputs. The analysis of the determinants of efficiency indicates that a high level of municipal revenue, a high degree of party fragmentation, and a high share of socialists in the local council are associated with low educational efficiency. The negative effects of the share of socialists and party fragmentation seem to reflect both higher resource use and lower student performance.educational efficiency, DEA analysis, determinants of efficiency, political and budgetary institutions

    Efficiency potential and efficiency variation in Norwegian lower secondary schools

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    The paper performs an efficiency analysis of the lower secondary school sector in Norway. The efficiency potential is calculated to 14 percent based on a DEA analysis with grades in core subjects (adjusted for student characteristics and family background) as outputs. The analysis of the determinants of efficiency indicates that a high level of municipal revenue, a high degree of party fragmentation, and a high share of socialists in the local council are associated with low educational efficiency. The negative effects of the share of socialists and party fragmentation seem to reflect both higher resource use and lower student performance.educational efficiency; DEA analysis; determinants of efficiency; political and budgetary institutions

    The Intertemporal Spending Behavior of Local Governments: A Comparative Analysis of the Scandinavian Countries

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    The paper investigates the intertemporal spending behavior of Scandinavian local governments with particular attention to liquidity constraints imposed by balanced-budget-rules and other regulations. The main finding is that Danish local governments are more able to smooth current expenditures than their Norwegian and Swedish counterparts. Whereas the permanent-income hypothesis cannot be rejected for Denmark, it is in most cases rejected for Norway and Sweden. The Swedish system of market-based control and the Norwegian system of administrative control seem to produce similar results in terms of consumption smoothing.Local government consumption; Intertemporal decision-making

    Public Sector Efficiency: The Roles of Political and Budgetary Institutions, Fiscal Capacity and Democratic Participation

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    The purpose of this paper is to investigate whether efficiency in public service provision is affected by political and budgetary institutions, fiscal capacity, and democratic participation. In order to address this issue we take advantage of a new global efficiency measure for Norwegian local governments. There is strong evidence that high fiscal capacity and a high degree of party fragmentation contributes to low efficiency. In addition we find that increased democratic participation tends to increase efficiency, while a centralized top down budgetary process is associated with low efficiency.Public sector efficiency; Political and budgetary institutions; Fiscal capacity; Democratic Participation
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