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Assessing and explaining the relative efficiency of local government

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  • Afonso, António
  • Fernandes, Sónia

Abstract

We assess the relative efficiency of local municipalities using Data Envelopment Analysis and parametric analysis. As an output measure we compute a composite local government indicator of municipal performance, using data for Portuguese municipalities. This allows assessing the extent of possible municipal improvement relative to the "best-practice" frontier. Our results suggest that most municipalities could improve performance without necessarily increasing municipal spending. In a second stage efficiency scores are explained by means of a Tobit analysis with a set of relevant explanatory socio-economic factors playing the role of non-discretionary inputs, such as education and per capita purchasing power.

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  • Afonso, António & Fernandes, Sónia, 2008. "Assessing and explaining the relative efficiency of local government," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 1946-1979, October.
    • Handle: RePEc:eee:soceco:v:37:y:2008:i:5:p:1946-1979
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