Fiscal Decentralization and Redistribution: Considering Inclusive Growth
AUTHORS
Aejin Kim,Professor of Public administration, Gyeongsang University, Jinju, Republic of Korea
Jina Kim,Doctoral Student at Department of Public administration, Ewha Womans University, Seoul, Republic of Korea
Jhungsoo Park*,Professor of Public policy, Ewha Womans University, Seoul, Republic of Korea
ABSTRACT
The importance of inclusive growth, which includes both economic growth and mitigation of inequality, is being discussed in many countries. Notably, some studies have actively shown the relationship between fiscal decentralization and income redistribution based on the decentralization theorem that fiscal decentralization affects the competitiveness of the economy and the performance of government. This paper empirically analyzed the effect of fiscal decentralization on inclusive growth focused on income redistribution. The analysis showed that fiscal decentralization had a statistically significant impact on inclusive growth, particularly on redistribution indicators such as the Gini coefficient level, labor income share. As a result, fiscal decentralization, which transfers not only financial resources but decision-making authority to local governments, can contribute to reducing inequality by increasing the level of welfare for the people.
KEYWORDS
Fiscal decentralization, Inclusive growth, Redistribution, Laffer curve
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