Norwegian local public finance in the 1930s

The evolution of the welfare state in the twentieth century has changed local public finance considerably. The first part of this paper discusses t evolution of the Norwegian local finance during thecentury. An important aspect of the welfare state is equal rights andpossibilities for everyone independent of residence. We document hugevariation in local government spending in the fiscal year 1934-35. The differences in regional policy in the 1930s and the 1990s are illustrated by the correlation between municipal spending and privateincome. While the correlation is strongly positive in 1934-35, it is negative in 1995. The regional disparities in the 1930s initiated reforms with the aim of reducing the in equality. In the second part of the paper we find that private income was the main determinant of municipal spending in 1934-35. Even though grants from the central government had a positive effect on municipal spending, the grant wastoo low to have a major impact on municipal spending differences.