Our key independent variable is fiscal decentralization (DECENTRALIZATION) measured as the percentage of state and local government spending that is undertaken at the local level.
To rigorously test the proposition concerning fiscal decentralization and the infrastructure quality of bridges, we estimate the following model:
DECENTRALIZATION is the share of state and local government spending that local level governments undertake.
The key finding from Table 2 is the negative and statistically significant relationship between fiscal decentralization and the infrastructure quality of bridges.'' This suggests that greater decentralization at the local level, within a state, leads to a higher quality of bridges.
Taken together, the estimation of the baseline model provides rather strong evidence of a negative and statistically significant relationship between fiscal decentralization and a state's infrastructure quality of bridges measured by the share of deficient bridges in a state.
In this section, we consider a number of robustness checks of our main finding that fiscal decentralization improves the quality of bridges.
Of greater importance, however, is the fact that in the robust regression model, DECENTRALIZATION remains negative and statistically significant at the 1% level.
As a second robustness check, we add the square term of decentralization to the baseline model.
As a final means of robustness and completeness, we analyze if fiscal decentralization has an impact on the infrastructure quality of highways.
Therefore, we can state with confidence that fiscal decentralization has a negative and statistically significant effect on the deficiency of the highway system in the United States.
We want to continue this line of research by specifically examining the role of political institutions and the political decisionmaking process on the quality of infrastructure by focusing on the role of fiscal decentralization. Using data from 1992 to 2012, we test the hypothesis of whether the quality of infrastructure of both bridges and roadway surfaces improves with the degree of decentralization within a state.
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