Fiscal Risk Sharing and Redistribution Between Austrian States

The authors were informed about the Guidelines for Good Scientific Practice of the Austrian Agency for Research Integrity (ÖAWI), in particular with regard to the documentation of all elements necessary for the replicability of the results. [...] One of the main reasons for the low variation in primary incomes is that the two Austrian states with the lowest GDP per capita (Burgenland and Niederösterreich) host a lot of commuters to Wien, pushing their primary income up and pulling down the one of Wien (orange bars and red dots in left panel of figure 2.3)5. [...] The two states forming the South region (Kärnten and Steiermark) and the four states forming the West region (Oberösterreich, Salzburg, Tirol and Vorarlberg) tend to be relatively similar to each other in economic terms, with the first two being below the Austrian average in terms of primary income and GDP, and the latter four being above the Austrian average. [...] To indicate the impact of distribut- ing taxes according to the residency of income recipients, we reallocated wage-dependent taxes (about one half of overall taxes) using the relative difference between compensation of employees according to residency of the employee to the one according to the place of production.14 The 13The per-capita transfers for hospitals by both the federal government and. [...] Figure 6.1 decomposes the net taxes by states shown in figure 5.1 into the components 14 also used in the regressions shown in table 4.1.15 It shows that especially the pension system (due to the large differences in the age structure of states) and other federal taxes have a large redistributive impact across states.