Efficiency of Local Policies on Inequality : The Impact of Decentralization in Morocco

This paper examines the impacts of fiscal decentralization on the effectiveness of public policies in reducing inequality.It uses the stochastic frontier analysis (SFA) method. The results obtained show that central states transfers to local collectivities have the biggest effect on reducing inequality in the standard of living and investment expenditures have the smallest effect. These results show that, rather than reducing inequality, redistributive policies increase the level of inequality. In addition, decentralization exacerbates the effect of transfers on increasing inequality; however, it seems to have no significant effect on investment spending. These results complement the literature and confirm the hypothesis that the efficiency of local fiscal policies depends on the level of decentralization