This study examines the linkages between fiscal decentralization and social services in Nigeria. It is based on a panel of the 36 states and federal capital territory. Social services in health and education are measured by outcomes such as infant mortality rate and literacy rate. The index of fiscal decentralization is measured by the ratio of state government revenue to federal government revenue. Data employed in the research spans 2002 to 2010. Findings demonstrate that higher fiscal decentralization is consistently associated with lower mortality rate and higher literacy rate; benefits from fiscal decentralization are not particularly important for states with high population and low
internally generated revenue; the internally generated revenue enhances literacy rates and reduces infant mortality. This underscores the need to improve state autonomy and reduce dependence on transfers from the centre. On the whole, the research findings are useful for the ongoing public sector reforms in Nigeria.
