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Incentive Schemes for Local Government: Theory and Evidence from Comprehensive Performance Assessment in England

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  • Ben Lockwood
  • Francesco Porcelli

Abstract

This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a theoretical political agency model, we predict that CPA should increase service quality and local taxation, but have an ambiguous effect on the efficiency of service provision. We test these predictions using Welsh local governments as a control group: CPA increased the property tax, and our index of service quality, but had no significant effect on efficiency overall. There is evidence of a heterogenous effect of CPA: it impacted more on councils where electoral competition was initially weak, in line with our theory.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 5 (2013)
Issue (Month): 3 (August)
Pages: 254-86

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Handle: RePEc:aea:aejpol:v:5:y:2013:i:3:p:254-86

Note: DOI: 10.1257/pol.5.3.254
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Cited by:
  1. Ben Lockwood & Francesco Porcelli, 2013. "Incentive Schemes for Local Government," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 11(1), pages 55-63, 04.
  2. Maria Alessandra Antonelli & Veronica Grembi, 2014. "Central Targets and local Agendas: Missing Lisbon 2010," Public Finance Research Papers 6, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome.
  3. Ivo Bischoff & Frédéric Blaeschke, 2013. "Incentives and Influence Activities in the Public Sector: the Trade-off in Performance Budgeting and Conditional Grants," MAGKS Papers on Economics 201320, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  4. Ivo Bischoff & Frédéric Blaeschke, 2012. "Window-Dressing and Lobbying in Performance-Budgeting: a Model for the Public Sector," MAGKS Papers on Economics 201212, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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