The Flypaper Effect: Redistribution and Public Spending on the State Level in Comparison

In this paper, I argue that we can directly observe the impact of different degrees of solidarity when analysing the system of public finance in comparative perspective. The main hypothesis is that the stronger the principle of solidarity is enshrined in the constitution of a federal country, the greater is what scholars of public finance call the ‘flypaper effect’, namely local overspending of common resources. In order to test the hypothesis, I will present a comparative model of public spending on the state level in five ‘mature federations’ (Australia, Canada, Germany, Switzerland and the United States) including all states within those five countries over a 15 year period.