Incentive distortions in decentralized systems of governance – why is financing decentralized systems so difficult?

National governments often choose to delegate tasks and burdens to lower levels in a comprehensive system of administration. Local and regional governance thereby becomes an important factor in policy implementation. This paper focuses on the incentive problem that follows from such a delegation of competences to collect taxes and do lending at the local level in a multi-level geo-administrative system. The paper uses the Danish administrative system to illustrate the actual outcomes from such incentive problems. A two-step estimation procedure will be used to derive results on the importance of incentive problems in multi-level geo-administrative systems. Setting up elaborate administrative systems will introduce agency problems that lead to inefficiencies in both local and national governance.

Happiness in Europe: Cross-Country Differences in the Determinants of Subjective Well-Being

The purpose in the present paper is to use individual panel data in the European Community Household Panel to analyse the impact on self-reported satisfaction from a number of economic and demographic variables. The paper contributes to the ongoing discussion of the relationship between life satisfaction and income. The panel property of the data makes it possible to study also the impact on satisfaction from income changes as well as the impact from acceleration in income and changes in labour market status on changes in satisfaction. A number of demographic variables and individual attitude indicators are also entered into the analysis of both the level of satisfaction and the change in satisfaction from one wave of the survey to the next. We find a strong impact from the level of income in all countries, an impact from change and acceleration in income for a smaller number of countries, a strong impact from most changes in labour market status and finally important effects from a number of demographic variables.satisfaction, income, labour market status, health

Marketization in Space: Local and Regional Effects on Marketization in Denmark

New public economics has emphasized the importance of using market solutions in the public sector. Public-private partnerships and marketization through tender calls have been among the instruments of this policy trend. The regional and local effects of such policies are highly relevant for Denmark, as about 66 percent of the public budget in 2003 is delegated to municipalities and counties. The total public expenditures represent 55 percent of GDP in 2003 and are therefore a vital element in overall economic activity. These instruments from the new public economics thereby become active vehicles to local and regional development, which has to a high extent been delegated to local and regional authorities. They arguably constitute the most pronounced policy area within regional and local policies in Denmark. The hypothesis tested here is that marketization is a potent policy instrument for local and regional development in Denmark and that it is therefore important to plan for the operational areas to be subject to marketization. Using panel data on the use of tender calls by Danish municipalities for the period 1993-2004, the paper tests the extent to which the use of marketization influences the local and regional growth potentials, controlling for a number of local and regional characteristics. These growth potentials are measured through a number of indicators such as income growth, job growth and formation of new firms in different sectors. The findings indicate that marketization is most important policy tool in regional planning and development. Not only is it effective, but it is to a large extent also in the hands of local politicians. The slack in use of marketization among Danish municipalities and counties may therefore be a threat to overall growth at the local, regional and national level in Denmark.

The long-term consequences of brain drain related to depopulation on social and territorial cohesion with a focus on the North of the Netherlands and a short comparison with Germany and Denmark:Research Report Department of Economic Geography

Academic paper on request of the European Commission for preparing a Communication on brain drain and the challenges associated with population decline in line with the Commission Work Programme for 2022