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Fiscal Decentralisation and Inclusive Growth

image of Fiscal Decentralisation and Inclusive Growth

Intergovernmental fiscal frameworks, as considered by the OECD Network on Fiscal Relations Across Levels of Government, are a core driver of inclusive growth. Certain institutions and policies can contribute to a more equitable distribution of economic gains across jurisdictions and income groups, such as equalisation systems. In particular, the quality of public sector outcomes depends on how responsibilities and functions such as education or health care are shared across government levels. This implies that intergovernmental fiscal frameworks, which drive the division of roles of the central and sub-national governments, critically influence growth and the inclusiveness of an economy. This book brings together academics and practitioners to address key aspects of intergovernmental fiscal relations and country experience, as they relate to inclusive growth.

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Decentralised funding and inequality in education

This chapter explores the link between the decentralisation of education funding to the local level and inequality in outcomes. In most countries, autonomous local taxes fund, at most, a small share of education expenses. They play a significant role, however, in a few Nordic countries and in Switzerland. The economic literature suggests that local funding makes educational systems more efficient at the expense of equity. However, inequality is not systematically larger in more decentralised countries. This finding does not appear to be driven by differences in socio-economic homogeneity, but rather by a range of policies that mitigate or offset any adverse impact. Some of these policies may still bear an equityefficiency trade-off.

English

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