Does revenue-sharing improve government service quality? Evidence from Seoul metropolitan districts

ABSTRACT

As a way to narrow the fiscal disparity across local governments with different revenue capacity, revenue-sharing institutionalizes relatively affluent governments to transfer some revenues for the poor. However, effects of the shared revenue, for both transfer-losing and transfer-gaining governments, on individual governments’ service quality are unknown. In this study, we investigate the connection between the shared revenue and government service quality, the concept measured with tangibility, empathy, assurance, responsiveness, and reliability. Using data of 25 districts in Seoul Metropolitan Area from 2008 to 2016, our findings demonstrate the shared revenues are positively associated with all measures of government service quality.

KEYWORDS:

• Revenue-sharing
• government service quality
• local government finance
• intergovernmental relationship

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Thes layers appear in a metropolitan area. In the suburb area, the layers include the central government, province governments, and cities and counties.

2. An individual variable of government service quality has 3 or 4 indicators that have different questions. For example, the service tangibility is composed of 4 questions (see Table 2). The questions range from 1 (extremely dissatisfied) to 5 (extremely satisfied). If the average of the questions is 5, the score of government service tangibility is 100 points (5 points *20 = 100 points).

3. The Seoul survey report does not show the scores of individual indicators to construct the concepts such as tangibility, empathy, assurance, responsiveness, and reliability, but include the average scores of the concepts.

4. Due to the multicollinearity problem for the relationship between total population and population under 18, we included only young population as one of the control variables.

Additional information

Notes on contributors

Min-Gon Kim

Min Gon Kim, Ph.D., is Assistant Professor at Department of Public Administration, Han-Yang Women`s University. His research interests are in local government, urban policy analysis and evaluation.

Ji Hyung Park

Ji Hyung Park, Ph.D., is Assistant Professor at Department of Public Administration at Soongsil University. His research interests are in public budgeting and finance, and urban management, focusing on citizen participation, form of government, fiscal health, performance budgeting, revenue diversification, and city-county consolidation.

HyungGun Park

HyungGun Park, Ph.D., is a researcher at the Institute of Governance and Policy Evaluation at Sungkyunkwan University. His research areas include intergovernmental relation, urban governance, and public and finance, with specific interest in special district and citizen participation.