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Bargaining power
 
Local government debt, LRE                   0.40         --
Government duration, LRE                    -0.04         --
Party fragmentation, LRE                    -0.22        -0.76

Notes: Only significant effects reported. The calculations are based on regressions 3a and 3b in Table B3. LRE is long-run elasticity and SRE is short-run elasticity. Elasticity at mean for political variables.

Table 4. National versus local decisions

Legend for Chart:
 
A - Dependent variable
B - Local versus national income: W
C - Local versus national income: T/Cl
D - Local versus national income: St/Cl
E - Local versus national income: Sp/St
F - Local versus national ideology: W
G - Local versus national ideology: T/Cl
H - Local versus national ideology: St/Cl
I - Local versus national ideology: Sp/St
 
A
 
         B               C              D              E
         F               G              H              I
 
Sample period
 
      1948-1990      1948-1990      1948-1990      1974-1990
      1948-1990      1948-1990      1948-1990      1974-1990
 
Encomp(national)
 
      0.548          0.756          0.926          0.012
      0.601          0.479          0.135          0.240
 
Encomp(local)
 
      0.003          0.002          0.354          0.098
      0.893          0.756          0.677          0.301

Notes: Regressions 3a and 3b in Tables B2-B3 without restrictions augmented with GDP and G in the tests for local versus national income, and with the share of socialists in local and national parliaments in the tests for local versus national ideology. In both cases the variables are included at level and at differenced form. Encomp(national) is an F-test for excluding local variables, and vice versa for Encomp(local). P-values presented.

GRAPH: Figure 1. Teacher real consumer wage (1990-NOK).

GRAPH: Figure 2. Teacher input per class.

GRAPH: Figure 3. Class size.

GRAPH: Figure 4. Teacher input per student.

References

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Borcherding, T. (1985) The causes of government expenditure growth: a survey of the US evidence, Journal of Public Economics, 28, pp. 359-382.

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Borge, L. E. & Rattso, J. (1995) Demographic shift, relative costs and the allocation of local public consumption in Norway, Regional Science and Urban Economics, 25, pp. 705-726.

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Appendix A: Data

Data sources are available on request.
 
W               Real consumer wage, yearly nominal wage for
                teachers deflated with the consumer price index.
                Before 1958, W is calculated as total teacher wage
                cost per teacher man-year. From 1959, W is
                calculated as mean gross paid wage. Data are
                not available, and nominal wage is interpolated,
                during 1958, 1960-1962, 1964-1966 and 1968-1972.
 
WT        Defined as W/P.
 
P               Price index for public consumption divided with
                the consumer price index.
 
T               Number of teacher man-years. T is calculated as
                the number of teachers in full post plus the half
                of the teachers reported in part time post. The
                definition of part-time post was changed in 1973.
 
Cl              Number of classes.
 
St              Number of students.
 
N               Population.
 
m               Matching grant rate. Calculated as total earmarked
                grants in relation to total school spending in the
                equation for non-teacher spending per student.
                Because total school spending is not available
                for 1958-1972, m is calculated as total earmarked
                grants in relation to WT*T in the class size
                equation.
 
GDP             Gross domestic product per capita deflated with
                the consumer price index.
 
G               Municipal and county spending per capita deflated
                with the price index of public consumption. G
                includes both consumption and investment
                expenditures. Interest payment and downpayments
                on loans are excluded.
 
infl            Yearly percentage change in the consumer price
                index.
 
ELDERLY         Share of population above age 65.
 
DIV             Share of divorces to total marriages.
 
CENT            Inverse of the share of total man-years in
                agriculture.
 
W               Yearly wage rate in manufacturing deflated by
                consumer price index.
 
UNEM            Average unemployment ratio.
 
VAC             The vacancy rate in primary school, measured as
                the share of teachers in full post without teacher
                training course. These teachers are employed on
                short-term contracts.
 
FEMALE          The share of female teachers among teachers in
                full post.
 
DEBT            Municipal and county total debt per capita
                deflated with the price index of public
                consumption.
 
SDM             Dummy variable for the majority government of the
                social democratic party, 1946-1961.
 
TBC             Dummy variable for the period with stable
                two-block competition, 1962-1973.
 
SOCN            Share of socialist representatives in the national
                parliament. Representatives from the Labour Party,
                Communist Party and Socialist Left Party are
                treated as socialists.
 
SOCL            Share of votes on socialist parties in local
                elections.
 
COAL1           Coalition government in minority.
 
COAL2           One-party government in minority.
 
COAL3           Coalition government in majority.
 
DURN            Duration of the national government in years.
 
HERFN           Herfindahl index for party fragmentation of the
                national parliament, calculated as
 
                [Multiple line equation(s) cannot be represented
                in ASCII text]
 
                (A1)
 
                where SHp is the share of the seats held by
                party p.
 
HERFL           Herfindahl index for party fragmentation of local
                councils, calculated as (A1), but Slip is the
                share of votes in local elections.
 
FREEZE          Income policy dummy due to wage freeze. FREEZE =
                1 in 1979 and 1988, 0.5 in 1989 and 0 otherwise.
 
D58, D7390      Dummy variables for 1958 and 1973-1990
                respectively.
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