Fiscal Decentralization and Local Employment Growth: Empirical evidence from Kosovo's municipalities

Abstract

The main objective of this research consists in assessing the impact of the level of local fiscal decentralization on local employment growth in municipalities of Kosovo. To achieve the goal of this study, several panel datasets have been constructed, which include all 38 municipalities in Kosovo and cover the period from 2012 to 2020. This study also uses several models to test the relationship between fiscal decentralization and employment growth; however, the Hausman Taylor IV estimator is the main estimation strategy. The findings of the paper recommend that local fiscal decentralization has positive effects on local economic growth especially in the level of employment regardless of the size of Kosovo municipalities.