Theory of Public Finance in a Federal Stat

Abstract

The opening page of this book says that, in recent decades, there has been a ‘substantial increase in the mobility of capital and population between the individual jurisdictions of long‐established federal states (such as Canada, Germany and the USA) and among the formerly independent member countries of the European Union.' It adds that the book will seek to show that the results of this increasing mobility are that fiscal decentralization is essentially beneficial for resource allocation, at least for local public goods, but not for income distribution. It would be apt to start such a book with some data illustrating the ‘substantial increase' in the mobility of population and capital in the places cited. However, the author gives no information for Canada or Germany. For the USA, his data show that inter‐state population mobility has actually fallen since 1970; and while he seems to infer from the falling inter‐regional distribution of incomes in the USA between 1900 and 1990 that capital mobility has increased, this fall might reflect the effects of sustained rather than accelerating migration. For the EU, he accepts that the mobility of labour between member countries is still very low. So the only clear evidence given for increased mobility seems to be that of capital within the EU.