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Value for money? German local government efficiency in a comparative perspective

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Author Info

  • Alexander Kalb
  • Benny Geys
  • Friedrich Heinemann

Abstract

In this article, we investigate the cost efficiency of German local governments in the state of Baden-W�rttemberg in 2004 using a stochastic frontier approach. Besides being the first study on German data, we add two elements to the literature. First, we provide a comparative perspective, allowing us to embed our results in the broader literature. Second, unlike most previous studies, we explicitly account for exogenous or nondiscretionary influences when estimating municipal efficiency scores. The results suggest that disregarding such exogenous factors can lead to significant and systematic bias in the estimated inefficiency levels. Particularly, underestimation of efficiency occurs for municipalities with high tourist activity, while the reverse is true for municipalities with high unemployment.

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File URL: http://hdl.handle.net/10.1080/00036846.2010.502110
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 44 (2012)
Issue (Month): 2 (January)
Pages: 201-218

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Handle: RePEc:taf:applec:44:y:2012:i:2:p:201-218

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Cited by:
  1. Peter Bönisch & Peter Haug & A. Illy & L. Schreier, 2011. "Municipality Size and Efficiency of Local Public Services: Does Size Matter?," IWH Discussion Papers 18, Halle Institute for Economic Research.
  2. da Cruz, Nuno Ferreira & Marques, Rui Cunha, 2014. "Revisiting the determinants of local government performance," Omega, Elsevier, vol. 44(C), pages 91-103.
  3. Ivo Bischoff & Peter Bönisch & Peter Haug & A. Illy, 2013. "Vertical Grants and Local Public Efficiency," IWH Discussion Papers 1, Halle Institute for Economic Research.
  4. Cosmin Eugen ENACHE, 2012. "The efficiency of expenditure-related redistributive policies in the European countries," Timisoara Journal of Economics, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 5(18), pages 380-394.

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