Decentralization, Subjective Well-Being, and the Perception of Institutions


  • Luis Diaz-Serrano,

    Corresponding author
    • Departament d'Economia (URV), Av. de la Universitat 1, Reus, Spain
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  • Andrés Rodríguez-Pose

    1. Department of Geography and Environment (LSE), London, UK
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    • Acknowledgements: We are grateful to the editors and to two anonymous referees for their insightful comments to earlier versions of the paper. Comments from participants at seminars in London, Newcastle and Madrid are also gratefully acknowledged. Luis Diaz-Serrano acknowledges the financial support from the Spanish Ministry of Education (grant # ECO2010-20829). Andrés Rodríguez-Pose is grateful for the support of the European Research Council under the European Union's Seventh Framework Programme (FP7/2007-2013) / ERC grant agreement n° 269868 and of a Leverhulme Trust Major Research Fellowship. The research is also part of the Prociudad-CM programme and of the UK Spatial Economics Research Centre. The usual disclaimer applies.


This paper analyses whether the different powers and resources at the disposal of local and regional governments across Europe deliver greater satisfaction with political institutions and lead to greater life satisfaction. The analysis uses microdata from the four available waves of the European social survey (2002, 2004, 2006 and 2008), including more than 160,000 observations of individuals living in 29 European countries. Our results reveal that fiscal and some forms of political decentralization have a positive and significant effect on the overall subjective well-being of individuals. However, fiscal decentralization has a different effect on the perception of institutions depending on whether we consider subnational expenditure or revenues. Similarly, the effect of political decentralization on the level of satisfaction with institutions also varies depending on whether the capacity of local governments to influence national politics or to exert authority over their own citizens is considered. The results also show that citizens seem to be more satisfied with the actual capacity of their local governments to deliver than with the general principle that they can have a say on their daily politics and policies.