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Grant desing in Denmark: A normative composite index?

Grant desing in Denmark: A normative composite index?. Niels Jørgen Mau Danish Ministry of the Interior and Social Affairs. Program. Classification Local governments and grants in Denmark Discussion – choosing grant type: - Central Government motives - Local governments conditions

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Grant desing in Denmark: A normative composite index?

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  1. Grant desing in Denmark: A normative composite index? Niels Jørgen Mau Danish Ministry of the Interior and Social Affairs

  2. Program • Classification • Local governments and grants in Denmark • Discussion – choosing grant type: - Central Government motives - Local governments conditions • Proposal of a normative composite index • Evaluation – three Danish cases

  3. Classification of grants • a. general grants • a.1. general grants • a.2. ring fenced block grants • b. earmarked grants • b.1. reimbursement (matching) grants • b.2. activity linked grants • b.2.1. stepwise grants for income transfers • b.2.2. (taxi-)meter grants • b.2.3. production linked grants • b.2.4. application grants.

  4. The Danish situation… • One of the Worlds most decentralised countries • Increasing on expenditure side – decreasing on revenue side -> grants • Earmarked grants getting more important for regions – but small decline for municipalities

  5. Preferences of Central Government • Two partly competing motives: A) accountability at the local level - avoid a veil for local governments B) influence for the central level - median voter vs. ”minorities” - amenities, externalities etc. - or just patronising?

  6. The Dutch Elm Disease, Tiebout (1956) p. 423

  7. Conditions on local government level • Variation and identification of expenditure needs • Discretionary power of local governments • Measurability

  8. A normative composite indexfor considering earmarked grants vs general grants Four decisive factors: • Local discretion • Expenditure needs variation • Measurability • Merit aspects

  9. Example - scenario 2. Illustrating potential of earmarked grants to influence l.g. behaviour Full local discretion High exp. needs variance Merit aspects Measurable production

  10. Case 1: Grants to support care for the elderly Full local discretion High exp. needs variance Merit aspects Measurable production

  11. Case 2: Grants to support growth in hospital output Full local discretion High exp. needs variance Merit aspects Measurable production

  12. Did it work: waiting lists for public hospitals (weeks)

  13. Case 3: Reduced reimbursements rates for long periods of sickness benefits Full local discretion Low exp. needs variance Merit aspects Measurable production

  14. Some conclusions • Many aspects to take into account • None of them should be forgotton • New ”intelligent systems of grant” => measurability is decisive • Local governments’ organisations might be reluctant… • But they usually have good reasons: general grants support allocations across various expenditure mandates

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