Centralizing Tendencies in the Public Sector in Germany
39 Pages Posted: 10 Aug 2005 Last revised: 20 Aug 2008
Date Written: 2005
This paper investigates the long-term trend and the underlying determinants of public sector centralization in Germany from 1871 until today. The institutional and the quantitative review of the German history provides no conclusive evidence for a continuous process of government centralization as suggested by Popitz law, but rather for some distinct developments caused by the effects of wars and regime changes. Accordingly, whereas the role of the central government increased continuously at the expense of the state governments until World War II, after 1950 the state level regained importance. An empirical analysis for the period 1950 to 2001 reveals a significant decentralizing effect of per capita income growth, but provides no clear evidence for a causal relationship between economic and European integration and fiscal decentralization in the case of Germany.
Keywords: Public Sector Centralization, Popitz Law, Determinants of Centralization, Germany
JEL Classification: F15, H72, H77
Suggested Citation: Suggested Citation