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Creative Destruction and Fiscal Institutions: A Long-Run Case Study of Three Regions

  • We analyze the rise and decline of the steel and mining industries in the regions of Saarland, Lorraine and Luxembourg. Our main focus is on the period of structural decline in these industries after the second world war. Differences in the institutional framework of these regions are exploited to analyze the way in which the broader fiscal constitution sets incentives for governments either to obstruct or to encourage structural change in the private sector. Our main result is that fiscal autonomy of a region subjected to structural change in its private sector is associated with a relatively faster decline of employment in the sectors affected. Contrary to the political lore, fiscal transfers appear not to be used to speed up the destruction of old sectors, but rather to stabilize them.

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Metadaten
Author: Lars P. Feld, Jan SchnellenbachORCiD, Thushyanthan Baskaran
ISSN:0936-9937
Title of the source (English):Journal of Evolutionary Economics
Document Type:Scientific journal article peer-reviewed
Language:English
Year of publication:2012
Tag:Creative destruction; Fiscal federalism; Grants in aid; Structural change
Volume/Year:22
Issue number:3
First Page:563
Last Page:583
Faculty/Chair:Fakultät 5 Wirtschaft, Recht und Gesellschaft / FG VWL, insbesondere Mikroökonomik
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