Is fiscal decentralization good for your health? Evidence from a panel of OECD countries

In this study I use improved data of fiscal decentralization to re-examine the hypothesis that shifts towards more fiscal decentralization would be accompanied by improvements in population health on a panel of 19 OECD countries. The advantage of the new measure of decentralization is that it reflects better than previous measures the existence of autonomy in the decision making authority of lower tiers of government, a crucial issue in the decentralization process. The results based on panel data estimation techniques robust to heteroskedasticity and autocorrelation show that fiscal decentralization has a substantial and positive effect on health outcomes over the period studied. However, I find that conventional measures of decentralization tend to over-estimate the magnitude of the effect.