This paper analyzes the determinants of welfare benefit levels within a highly fiscally decentralized context. More specifically, we analyze the role of mimicking as a driver of the institutional design of subnational government policies in the absence of federal co-ordination and financing. Empirically, we focus on the welfare benefit programs of Spanish regional governments during the period 1996-2015. Our results strongly support the significant role played by mimicking: regional public agents observe what their peers are doing and act accordingly, and this holds even in a context of low mobility of households.
Ayala, Luis; Herrero-Alcalde, Ana; and Martinez-Vazquez, Jorge, "Welfare Benefits in Highly Decentralized Fiscal
Systems: Evidence on Interregional Mimicking" (2021). ICEPP Working Papers. 112.