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Secession of municipalities and economies of scale: Evidence from Brazil

Author

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  • Ricardo Carvalho de Andrade Lima
  • Raul da Mota Silveira Neto

Abstract

In the 1990s, there was a growing process of administrative decentralization that culminated in the creation of 1,016 new municipalities in Brazil. The aim of this paper is to verify the impact of the municipal secessions on the public expenditures and its association with economies of scale. Based on a Differences†in†Differences methodology, the obtained set of evidence indicates that those municipalities that underwent a secession process increased their per capita capital expenditures by 14.7 percent. In addition, we show evidence that strongly suggests that this increase in expenses can be explained by a reduction in economies of scale and rent†seeking behavior.

Suggested Citation

  • Ricardo Carvalho de Andrade Lima & Raul da Mota Silveira Neto, 2018. "Secession of municipalities and economies of scale: Evidence from Brazil," Journal of Regional Science, Wiley Blackwell, vol. 58(1), pages 159-180, January.
    • Handle: RePEc:bla:jregsc:v:58:y:2018:i:1:p:159-180
    DOI: 10.1111/jors.12348
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    Cited by:

    1. Davide Luca & Felix Modrego, 2021. "Stronger together? Assessing the causal effect of inter‐municipal cooperation on the efficiency of small Italian municipalities," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 261-293, January.
    2. Michał Myck & Mateusz Najsztub, 2020. "Implications of the Polish 1999 administrative reform for regional socio‐economic development," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(4), pages 559-579, October.
    3. Gissur Ó Erlingsson & Jonas Klarin & Eva Maria Mörk, 2021. "Does Size Matter? Evidence from Municipality Break-Ups," CESifo Working Paper Series 9042, CESifo.
    4. Silvestre, Hugo Consciência & Marques, Rui Cunha & Dollery, Brian & Correia, Aldenisio Moraes, 2022. "Regional consortia and transaction costs for sanitation services in Brazil," Utilities Policy, Elsevier, vol. 78(C).
    5. Cassidy, Traviss & Velayudhan, Tejaswi, 2022. "Government Fragmentation and Economic Growth," MPRA Paper 112045, University Library of Munich, Germany.
    6. Wang, Lingling & Watanabe, Tsunemi, 2019. "Effects of environmental policy on public risk perceptions of haze in Tianjin City: A difference-in-differences analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 109(C), pages 199-212.
    7. Yang, Lisha & Li, Yutianhao & Liu, Hongxun, 2021. "Did carbon trade improve green production performance? Evidence from China," Energy Economics, Elsevier, vol. 96(C).
    8. Fatkhurrohman, 2021. "Access to Fintech and Poverty : Evidence from the Arrival of 4G Networks in Indonesia," Warwick-Monash Economics Student Papers 24, Warwick Monash Economics Student Papers.
    9. Fei Chao & Chen You & Wen Jin, 2023. "Optimizing Urban Stock Space through District Boundary Reorganization: Hangzhou’s Administrative Adjustment," Land, MDPI, vol. 12(5), pages 1-16, April.
    10. Takeshi Miyazaki, 2021. "Economies of Scope and Local Government Expenditure: Evidence from Creation of Specially Authorized Cities in Japan," Sustainability, MDPI, vol. 13(5), pages 1-22, March.

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