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The stimulative effect of an unconditional block grant on the decentralized provision of care

Kattenberg, Mark and Vermeulen, Wouter (2017) The stimulative effect of an unconditional block grant on the decentralized provision of care. International Tax and Public Finance, 25 (1). pp. 166-199. ISSN 0927-5940

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Identification Number: 10.1007/s10797-017-9442-7

Abstract

Understanding the impact of central government grants on decentralized healthcare provision is of crucial importance for the design of grant systems, yet empirical evidence on the prevalence of flypaper effects in this domain is rare. We study the decentralization of home care in the Netherlands and exploit the gradual introduction of formula-based equalization to identify the effect of exogenous changes in an unconditional block grant on local expenditure and utilization. A one euro increase in central government grants raises local expenditure by twenty to fifty cents. Adjustments occur through the number of hours as well as through substitution between basic and more advanced types of assistance. These findings suggest that conditioning of grants is not required for the central government to retain a moderate degree of control over the decentralized provision of care.

Item Type: Article
Official URL: https://link.springer.com/journal/10797
Additional Information: © 2017, Springer Nature
Divisions: Spatial Economics Research Centre
Subjects: H Social Sciences > HB Economic Theory
JEL classification: H - Public Economics > H4 - Publicly Provided Goods > H42 - Publicly Provided Private Goods
H - Public Economics > H5 - National Government Expenditures and Related Policies > H51 - Government Expenditures and Health
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H75 - State and Local Government: Health, Education, and Welfare
Sets: Research centres and groups > Spatial Economics Research Centre
Date Deposited: 08 Mar 2018 11:22
Last Modified: 20 Feb 2019 12:24
URI: http://eprints.lse.ac.uk/id/eprint/86956

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