Essays on the political economy of decentralization

This thesis consists of three papers that make a distinctive contribution to the study of decentralization in the areas of fiscal policy, legislative behavior and government responsiveness. The first paper revisits theories of substate tax policy that usually draw on evidence from stable federations. Investigating fiscal decentralization reforms in four European countries subject to intense center-periphery territorial competition, I find that incentives operating in such systems generate a paradox whereby prominent autonomist regions are among the least likely to make proactive changes after decentralization. I theorize this as the best response to central government attempts at blame-shifting by locking regions into making controversial policy changes. The frequent alignment of autonomist parties as ‘catch-all’ parties buttresses incentives to avoid tax innovation. The second paper picks up these themes of institutional constraints and electoral incentives faced by political actors. Addressing a frequently confounding question in the field, I exploit the unusual treatment of dual candidacy in the UK’s devolved legislatures to examine whether mixed-member electoral systems influence the legislative behavior of reelection-seeking politicians and uncover a split finding. Although there is some evidence that status as a list or constituency member influences members’ assignments, other connections to members’ presumed re-election interests are not found. I contend that the influence of electoral rules is conditioned by contextual factors including re-selection procedures, chamber size and strong parties. Building on insights from the first paper, the third paper empirically scrutinizes expectations from fiscal federalism theory that lower tiers of government should be more responsive to citizens. Using the responses from two waves of FOI requests emailed to 812 public bodies, I develop objective measures of timeliness and quality which identify significant variations in responsiveness across the tiers and territories of the UK. I argue that the theoretical foundations of traditional fiscal federalism theory are inadequate because they ignore institutions’ cultural underpinnings, capacity constraints and principal-agent relationships shaping public officials’ behavior.