Nations without the distinct legal status of statehood have become increasingly important in the domestic politics of some European countries. Recent secession referenda in various countries (most notably Spain and the United Kingdom) have highlighted this trend. This study examines the impact that sub-state national identities have on the disbursement of intergovernmental transfer payments in two unitary states: the Netherlands and Spain. These cases were selected to conduct a “most different systems” analysis and examined transfers from the central governments to their respective highest levels of regional governance in the period between 2010 and 2018. Established theory on the interaction between identity and institutions supports the hypothesis that regions with more distinct separate identities will receive preferential treatment from their state governments than those without. This study used support for sub-state nationalist parties as a proxy measure for relative strength of their respective identities, which combined with the independent fiscal capacity of the regions was regressed against the amount of transfers received to understand any relationship that might exist. The results of the analysis of these variables indicates that although they are more effective predictors in Spain, there is a significant positive relationship in both countries between sub-state national identities and intergovernmental transfer payments. Individual analysis of the Netherlands found that, counter to established theory on intergovernmental transfers, regions with higher fiscal capacities also received more transfers from the government. Analysis of Spain found that, with a couple of notable exceptions, regions with higher degrees of sub-state nationalism received more transfers from the central government. This study fills gaps in the literature that previously did not specifically examine the relationships between these variables and highlights some areas for future study, both at smaller case levels and broader scales
