Four Essays on Fiscal Decentralisation and Secessions

Abstract : Between 1945 and 2008, the number of internationally-recognised countries grew from 74 to 193 (Spolaore, 2008). More recently, many countries experienced increasing decentralisation. In OECD countries, for example, the number of sub-national governments reached 140,000 in 2014. Moreover, these sub-national governments have an increasing influence in these countries (OECD, 2014). Given these trends towards an increasing decentralisation, this thesis studies two aspects of it: fiscal competition, and the endogenous choice of borders. In terms of fiscal competition, this thesis studies the competition between regional governments to attract one of a firm's new plants. The goal of this analysis is to study the strategic behaviour of the firm in such competitions or location contests. Indeed, in contrast to the existing literature on the subject that considers only firms producing in a single location, the first chapter of this thesis shows that the firm can modify its allocation of production across sites by differentiating the plants, thus attracting larger subsidies. In the second chapter, this thesis studies how the addition of prior investment in infrastructure by the regions before the location contest affects both the competition between the regions, and the behaviour of the firm. In terms of endogenous border choice, this thesis provides two analyses: one empirical and one experimental. In the third chapter, this thesis studies the decision of voters in 213 cities of Quebec to secede from a municipal merger that was imposed to them a few years earlier. The analysis reveals that voters choose secession more when the language and income differences between their own town and the other towns in the same merger are larger. The analysis also reveals that these two effects are not independent. Indeed, income differences have a larger effect when language differences are also large. Given the importance of language differences in the formation of ethnic groups in Quebec, these results suggest that the choice of voters is sensitive to ethnic differences, and not only to differences in preferences for public goods, as suggested by Alesina, Baqir, and Hoxby (2004). Finally, the last chapter presents the results of a laboratory experiment on the relationship between decentralisation and secession. The literature on the subject suggests the existence of two opposite effects. Decentralisation could quell secessionist movements by giving regions more liberty to take their own public goods decisions, but could also provide additional ressources to secessionist movements, which would reinforce secessionist movements. The results of the experiment show that the total effect of decentralisation is to decrease to probability of votes for secession.
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Simon Lapointe. Four Essays on Fiscal Decentralisation and Secessions. Sociology. Université d'Avignon, 2016. English. ⟨NNT : 2016AVIG2054⟩. ⟨tel-01503032⟩

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