Does Fiscal Decentralization Affect Infrastructure Quality? An Examination of U.S. States

Abstract

A transportation network is vital to an economy. However, the U.S. highway infrastructure suffers from insufficient maintenance creating inefficiencies such as increased travel times and increase in accidents. The means to fund the infrastructure and their maintenance is a point of debate. In this paper, we examine the role of political institutions and decision‐making on the quality of highway infrastructure by focusing on the role of fiscal decentralization. Using generalized linear model estimation on state data from 1992 to 2012, we find evidence that fiscal decentralization improves infrastructure quality. These results are robust to the choice of control variables and method of estimation. (JEL D73, H42, H72)

Fiscal Decentralization and Public Infrastructure Maintenance Expenditures: A Cross-Country Panel Analysis

“…They find that road and educational investments made by subnational governments in Spain are much more sensitive to changes in output, users, and costs than those investments made by the central government. Escaleras and Calcagno (2018) analyze the role of fiscal decentralization on the quality of highway infrastructure in the U.S. 50 states. Based on generalized linear model estimation on state data from 1992 to 2012, the authors find evidence that fiscal decentralization improves the quality of state highways and bridges.…”

The intergovernmental relations and their regulation in the context of decentralization of fiscal policy

“…The theoretical-methodological basis of the research is the papers of various scientists on the research problem, where the inter-budgetary relations [13], financial mechanisms for the development of territorial units [14][15][16][17][18][19][20][21][22][23][24][25], the characteristics of state fiscal arrangement models are studied [26][27][28][29][30][31][32][33][34]. This includes works by Aidt and Dutta, Ehrlich, Enikolopov, Ejobowah, Gaizatullin, Kline, Sow, Staehr, and others [35][36][37][38].…”

Road Quality in Indonesia: Is it Linked to Special Allocation Funds and Political Competition?

“…Other research is increasingly examining the impact of the amount of investment and the quality of the available public services. Fiscal decentralization can positively impact infrastructure quality (Escaleras & Calcagno, 2018;Kis-Katos & Sjahrir, 2017). However, several studies have shown that budget decentralization has not positively impacted the Indonesian context (Lewis, 2017).…”