Geoscience Reference
In-Depth Information
TABLE 6.9.
The Allocation of Interregional Transfers
in Germany, 1995-2002
Interregional Transfers per capita
Mobility
−
6.18
−
5.02
(8.05)
(8.0)
GDP Per Capita
-
−
6.2*
(3.4)
East
268.22***
205.66***
(102)
(107.5)
Copartisanship
−
15.9
−
13.6
(20)
(19.8)
East*Copartisanship
11.22
8.03
(33.1)
(32.6)
Intercept
28.7
171.5**
(22)
(80)
N
128
128
Adjusted R squared
.12
.14
Standard errors in parentheses.
Key: * p
<
.10,**p
<
.05, *** p
<
.01
THEORETICAL IMPLICATIONS
This analysis of the response of Germany's fiscal structure to the challenge of
Reunification yields one clear conclusion. The sudden increase in geographical
disparities in income and labor market risk did not result in a process of
decentralization and a reduction in levels of interregional transfers, as one
would predict on the basis of income distribution approaches (like Bolton and
Roland's median voter approach, 1997). Rather, it triggered first a massive
redistributive effort on both the interpersonal and interregional dimensions.
As a result of this effort, the natural increase in inequality of pre-tax and
transfers income associated with Reunification did not translate to an increase
in levels of disposable income inequality.
Over time, however, distributive tensions reemerged and a major East-West
divide renewed political contentions over the design of interpersonal and inter-
regional redistribution. In line with this topic's argument, this chapter has
shown that both the initial effort and the outcome of more recent contentions
reflect the impact of two factors: the need to cope with the risk (and subse-
quent reality) of a significant and undesired migration from East to West; and
the combination of political incentives created by the new economic geogra-
phy and the political capacities granted by the centripetal nature of the system
of representation. Challenges by net payers from the West, such as Bavaria,
met two ultimately critical stumbling blocks: net winners in the East have no
incentive to accept any proposal toward increasing fiscal autonomy, and they
