Caught at the Bottom? Redistribution and Local Government in an Era of Devolution

Abstract

Conventional wisdom in public finance holds that local governments should avoid committing resources to social welfare programs. Yet many local governments have assumed significant responsibilities in this area. This article reexamines theories of fiscal federalism based on the experiences of local government with redistributive policy. Theories of fiscal federalism make assumptions about the mobility of capital and labor, the range of choices in a metropolitan region, and the extent of fiscal-independence-afforded local governments. Empirical variation in these conditions, however, results in differing outcomes from local redistribution across place and over time.