Divided autonomy: fiscal decentralisation across Italian regions and municipalities

Abstract

This paper shows how granular subnational data reveal asymmetries invisible in national aggregates by constructing indicators of fiscal autonomy, revenue composition and fiscal dependence for Italian regional and municipal governments using the novel OECD’s REGOFI and MUNIFI databases. The analysis documents persistent asymmetries along three distinct layers: the constitutional divide between special-statute regions (SSRs) and ordinary-statute regions (OSRs), the north–south development gradient, and the contrasting patterns between governmental tiers. SSRs exhibit markedly higher fiscal autonomy and substantially lower transfer dependence. At the municipal level, the pattern reverses: ordinary-region municipalities show higher own-revenue ratios, producing a configuration of autonomous regions with dependent municipalities versus dependent regions with more autonomous ones. The north–south gradient remains pronounced municipally, where large revenue asymmetries coexist with broadly convergent per capita expenditure. This nominal equalisation cannot be taken as evidence of equivalent service provision. From a policy perspective, greater regional differentiation should be balanced with effective equalisation mechanisms to avoid adverse consequences for service provision in poorer regions.