Costs, Preferences, and Institutions: An Empirical Analysis of the Determinants of Government Decentralization

This paper examines the factors determining vertical government structures. An empirical analysis for a panel of OECD countries indicates that apart from preferences, economies of scale, and other factors, institutions explain cross-national differences in the degree of fiscal decentralization. Accounting for taxing powers of subnational governments, the evidence strongly supports the collusion hypothesis according to which delegation of decision-making concerning the assignment of powers and national legislation to subnational representatives leads to increased tax centralization, as compared to direct participation of the citizens of the subnational entities. On the other hand, direct democracy at the national level is associated with higher centralization. --Determinants of Decentralization,Decision-making Institutions,Decentralization Theorem,Collusion Hypothesis

The Art of Making Everybody Happy : How to Prevent a Secession

In this paper we examine compensation schemes that prevent a threat of secession by any of a country’s regions. We prove that, under quite general assumptions on the distribution of citizens’ preferences, there exist transfer schemes that are secession-proof. Moreover, we show that these compensation schemes entail a degree of partial equalization among regions: the gap between advantaged regions and dis-advantaged regions has to be reduced but it should never be completely eliminated. We demonstrate that in the case of a uniform distribution of the nation’s citizens, the secession-proof conditions generate the 50 percent compensation rule for disadvantaged regions. [JEL D70, H20, H73] The world political map has undergone dramatic changes since World War II.The number of independent countries in the world almost tripled over the second half of the last century, rising from a mere 74 in 1946 to 193 today; 45 percent of countries that exist today have a population under five million people. The abolition of colonial rule in Africa in the 1960s created 25 new countries. The last decade brought the next major wave of border changes, highlighted by the breakups of the former Soviet Union, Yugoslavia, and Czechoslovakia and the reunification of Germany. Quebec’s recent secession bid was defeated by a majority of less tha

Dominant Strategies Implementation when Compensations are Allowed:a Characterization Fundación

Dominant strategies truthful implementation of flexible social objectives involves the ability of the planner to alter the individual incentives in such a way that the externality imposed on society by each agent reporting a given type is fully internalized in the agent’s final payoff. In other words, the agents’ objective function must mimic the social objectives. We find that our main result is robust enough to explain why well-known mechanisms like Groves’s transfers work in some contexts while some other social objectives are not implementable in dominant strategies.Individual decisiveness, compensation mechanisms, dominant strategies.

Impact Evaluation Under the Banner of the Cross: An Integrated Approach to the Evaluation of Poverty Alleviation Programs

This thesis proposes normative criteria of individual and social welfare to evaluate poverty alleviation programs. Since World War II, both governments and NGOs have implemented a variety of development projects to address the poverty of individuals and groups around the world. The emerging field of impact evaluation applies a methodology borrowed from clinical drug trials to measure the effect of these projects on the populations that they serve. Sixty years of the history of development reveal that despite the sophistication of the statistical techniques, the field cannot offer basic guidance on what outcomes to measure. In response, this thesis develops a set of criteria that integrates resources from development economics, Catholic Social Teaching, the capability approach of Martha Nussbaum and Amartya Sen, and the political philosophy of John Rawls. First, it proposes five criteria of individual welfare that these fields all share: human dignity, political rights, socio-economic rights, internal goods, and agency. Next, it proposes five criteria of social welfare by integrating complementary themes from different fields: social welfare and the common good, solidarity and social capital, subsidiarity and smallscale development, extractive institutions and mutual relationships, and authentic development as growth in vulnerability. Finally, it applies these criteria to a case study of indigenous coffee growers in Chiapas, Mexico to compare the effects of Mexican government social programs, the fair trade coffee movement, and the value chain reform proposed by the Batsil Maya coffee cooperative that is sponsored by the Jesuit mission of Bachajón. Using these criteria, it judges that the work of Batsil Maya represents more authentic human development than the other two approaches because of 1) its integration with other mission projects that encompass all aspects of the lives of the Tseltales; 2) the way it addresses the structural forces responsible for Tseltal poverty; 3) the reciprocal relationships of mutuality that it fosters among all those who collaborate in the project