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Federalism or Country Size? Structural Explanations for Sub-National Policy Variation in Europe

Federalism
Policy Analysis
Regionalism
Quantitative
Comparative Perspective

Abstract

Current research increasingly addresses sub-national variation in public policy and a common explanation for this variation is the level of sub-national policy competence and autonomy. This paper argues that one important structural factor has been largely overlooked: country size (area and population size). Theoretically, policy variation is necessary to address regional preference heterogeneity: Policy variation occurs primarily between countries; but if countries spread across large territories or have heterogeneous populations, they tend to be federal or decentralized to also allow for regional differentiation. Sub-national policy scope is, thus, a functional equivalent of small country size. The main argument of this paper is that country size needs to be taken into account in the federalism literature as a structural and indirect determinant of sub-national policy variation. Empirically, this paper addresses two questions: Is policy variation really higher within federal and decentralized states than within centralized ones? Or is absolute country size a better predictor of variation? The paper uses indicators of policy output in the fields of general government performance, regional development, health and education from “The Quality of Government Regional Dataset” (2016). First, the variation in policy outputs is not only described and compared between countries and between regions across Europe (on the same level), but policy variation within large states, e.g. France, Germany, UK, is also compared to the variation among small states such as the Benelux, Scandinavian or Central-Eastern European states (cross-level comparison). The second empirical part tests two structural explanations for within-country policy variation: country size and federalism/decentralization (various measures). It employs a multilevel regression model, precisely a “random-effects within-between analysis” with country-years nested in countries which allows to separately model within-country time effects (e.g. changes in sub-national policy scope) and between-country effects (e.g. of the sluggish population size variable).