Working Paper: CEPR ID: DP8356
Authors: Luis Diaz-Serrano; Andrés Rodríguez-Pose
Abstract: This paper analyses whether the different powers and resources at the disposal of local and regional governments across Europe deliver greater satisfaction with political institutions and lead to greater personal happiness. The analysis uses microdata from the four available waves of the European social survey (2002, 2004, 2006 and 2008), including more than 160,000 observations of individuals living in 29 European countries. Our results reveal that political and fiscal decentralization have a positive and significant effect on individuals? overall happiness. Fiscal decentralization also exerts a significant effect on the level of satisfaction with political and economic institutions and with the education and health systems, whereas the effect of political decentralization on these variables is more limited. The results show that citizens seem to be happier with the actual capacity of their local governments to deliver than with the general principle that they can have a say on their daily politics and policies.
Keywords: Europe; Fiscal Decentralization; Political Decentralization; Happiness; Satisfaction; Wellbeing
JEL Codes: H11; H77
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decentralization (H77) | Happiness (I31) |
| Fiscal Decentralization (H77) | Satisfaction with Institutions (D02) |
| Fiscal Decentralization (H77) | Satisfaction with Health Services (I19) |
| Political Decentralization (H77) | Satisfaction with Health Services (I19) |
| Political Decentralization (H77) | Happiness (I31) |
| Local Government Capacity (H70) | Happiness (I31) |
| Decentralization (H77) | Satisfaction with Democracy and Governance (D72) |