Advanced Search
MyIDEAS: Login to save this paper or follow this series

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

Contents:

Author Info

  • Benjamin Lockwood
  • Francesco Porcelli

Abstract

This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a simple 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 a difference in difference approach, using Welsh local authorities as a control group, exploiting the fact that local authorities in Wales were not subject to the same CPA regime. To do this, we construct original indices of service quality and efficiency, using Best Value Performance Indicators. We estimate that CPA increased the effective band D council tax rate in England relative to Wales by 4%, and increased our index of service quality output also by about 4%, but had no significant effect on our efficiency indices. There is evidence of heterogeneous effects of CPA on efficiency, with some evidence that CPA impacted more on less efficient councils, and the ‘harder test’ from 2005-8 having a much bigger effect.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-05/cesifo1_wp3483.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3483.

as in new window
Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:ces:ceswps:_3483

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: local government; incentives; efficiency; difference in difference; DEA;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Besley, Timothy & Coate, Stephen, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 85-114, February.
  2. Léopold Simar & Paul W. Wilson, 1998. "Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models," Management Science, INFORMS, INFORMS, vol. 44(1), pages 49-61, January.
  3. Stewart, Mark B., 2002. "The Impact Of The Introduction Of The Uk Minimum Wage On The Employment Probabilities Of Low Wage Workers," The Warwick Economics Research Paper Series (TWERPS) 630, University of Warwick, Department of Economics.
  4. Kneip, Alois & Park, Byeong U. & Simar, L opold, 1998. "A Note On The Convergence Of Nonparametric Dea Estimators For Production Efficiency Scores," Econometric Theory, Cambridge University Press, Cambridge University Press, vol. 14(06), pages 783-793, December.
  5. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, Elsevier, vol. 2(6), pages 429-444, November.
  6. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 19(2), pages 285-300, Summer.
  7. Eric Maskin & Jean Tirole, 2004. "The Politician and the Judge: Accountability in Government," Economics Working Papers, Institute for Advanced Study, School of Social Science 0020, Institute for Advanced Study, School of Social Science.
  8. Propper, Carol & Sutton, Matt & Whitnall, Carolyn & Windmeijer, Frank, 2010. "Incentives and targets in hospital care: Evidence from a natural experiment," Journal of Public Economics, Elsevier, Elsevier, vol. 94(3-4), pages 318-335, April.
  9. Simon Burgess & Deborah Wilson & Jack Worth, 2010. "A natural experiment in school accountability: the impact of school performance information on pupil progress and sorting," The Centre for Market and Public Organisation 10/246, Department of Economics, University of Bristol, UK.
  10. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(1), pages 249-275, February.
  11. Besley, Timothy J. & Bevan, Gwyn & Burchardi, Konrad B., 2009. "Naming & Shaming: The impacts of different regimes on hospital waiting times in England and Wales," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7306, C.E.P.R. Discussion Papers.
  12. Kenneth Rogoff & Anne Sibert, 1986. "Elections and Macroeconomic Policy Cycles," NBER Working Papers 1838, National Bureau of Economic Research, Inc.
  13. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, Elsevier, vol. 136(1), pages 31-64, January.
  14. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, Elsevier, vol. 145(1-2), pages 121-133, July.
  15. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 69-85, January.
  16. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  17. Revelli, Federico, 2008. "Performance competition in local media markets," Journal of Public Economics, Elsevier, Elsevier, vol. 92(7), pages 1585-1594, July.
  18. Simar, L. & Wilson, P.W., 1998. "A General Methodology for Bootstrapping in Nonparametric Frontier Models," Papers, Catholique de Louvain - Institut de statistique 9811, Catholique de Louvain - Institut de statistique.
  19. Roxana Guti�rrez-Romero & Dirk Haubrich & Iain McLean, 2008. "The limits of performance assessments of public bodies: external constraints in English local government," Environment and Planning C: Government and Policy, Pion Ltd, London, Pion Ltd, London, vol. 26(4), pages 767-787, August.
  20. Gersbach, Hans & Liessem, Verena, 2008. "Incentive contracts and elections for politicians with multi-task problems," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 68(2), pages 401-411, November.
  21. Revelli Federico, 2008. "Spend more, get more? An inquiry into English local government performance," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 200804, University of Turin.
  22. Dirk Haubrich & Iain McLean, 2006. "Assessing Public Service Performance in Local Authorities Through CPA - A Research Note on Deprivation," National Institute Economic Review, National Institute of Economic and Social Research, National Institute of Economic and Social Research, vol. 197(1), pages 93-105, January.
  23. Timothy Besley, 2004. "Joseph Schumpeter Lecture: Paying Politicians: Theory and Evidence," Journal of the European Economic Association, MIT Press, MIT Press, vol. 2(2-3), pages 193-215, 04/05.
  24. Alberto Alesina & Guido Tabellini, 2007. "Bureaucrats or Politicians? Part II: Multiple Policy Tasks," Levine's Working Paper Archive 321307000000000875, David K. Levine.
  25. Dewatripont, Mathias & Jewitt, Ian & Tirole, Jean, 1999. "The Economics of Career Concerns, Part I: Comparing Information Structures," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 66(1), pages 183-98, January.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

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

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Incentive Schemes for Local Government: Theory and Evidence from Comprehensive Performance Assessment in England (AEJ:EP 2013) in ReplicationWiki

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3483. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.