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Some Determinants of Intermediate Local Governments' Spending Efficiency: The Case of French Départements

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  • Maria Nieswand
  • Stefan Seifert
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    Abstract

    Efforts undertaken by France to restructure the allocation of governmental competencies increased the importance of subnational governments by transferring additional tasks. This paper analyzes the efficiency of public spending on an intermediate government level for a sample of 96 départements in metropolitan France in 2008. Spending efficiency is measured using Data Envelopment Analysis (DEA). Results indicate significant room for improvements and detect spending inefficiencies averaging between 10 and 22 percent, depending on model specification. To explain efficiency, a bootstrapped truncated regression, following Simar and Wilson (2007), is applied. The second-stage regression shows that efficiency is also determined by exogenous factors and identifies the distance to the national capital, inhabitants' income and the share of inhabitants of an age over 65 as significant determinants of efficiency.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.372972.de/dp1130.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1130.

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    Length: 26 p.
    Date of creation: 2011
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp1130

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    Keywords: Intermediate government spending efficiency; nonparametric efficiency analysis; bootstrapped truncated regression;

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    1. De Borger, B, et al, 1994. " Explaining Differences in Productive Efficiency: An Application to Belgian Municipalities," Public Choice, Springer, vol. 80(3-4), pages 339-58, September.
    2. Balaguer-Coll, Maria Teresa & Prior, Diego & Tortosa-Ausina, Emili, 2007. "On the determinants of local government performance: A two-stage nonparametric approach," European Economic Review, Elsevier, vol. 51(2), pages 425-451, February.
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