The political economy of intergovernmental grants: The Norwegian case

In: European journal of political research: official journal of the European Consortium for Political Research, Band 42, Heft 2, S. 163-195

Abstract

AbstractThe centralization of local public finance is commonly justified in terms of equality. The welfare state regulates local government and allocates grants in a way that sacrifices efficiency to achieve equality. The political economy model suggests that democratically elected national politicians may pursue policies that diverge from this. This article outlines a version of the political economy model based on seat‐maximizing politicians in central and local government. Both parliamentary policy making and local government lobbying may generate disparities in grant allocation. On the basis of data on central grant distribution in Norway, we observe persistent disparities in local government revenues that cannot be accounted for by regional policy aims or egalitarian objectives. Extensive data on local governments, the lobbying activities of local council members and the Storting (the Norwegian Parliament) allows us to test the political economy hypotheses. Disparities in the number of seats allocated to the national election districts, and differences in the local lobbying activities, influence the distribution of grants between municipalities and counties.