Advanced Search
MyIDEAS: Login

Municipality Size and Efficiency of Local Public Services: Does Size Matter?

Contents:

Author Info

  • Peter Bönisch
  • Peter Haug
  • A. Illy
  • L. Schreier

Abstract

Similarly to western Germany in the 1960s and 1970s, the eastern part of Germany has experienced a still ongoing process of numerous amalgamations among counties, towns and municipalities since the mid-1990s. The evidence in the economic literature is mixed with regard to the claimed expenditure reductions and efficiency gains from municipal mergers. We therefore analyze the global efficiency of the municipalities in Saxony-Anhalt, for the first time in this context, using a double-bootstrap procedure combining DEA and truncated regression. This allows including environmental variables to control for exogenous determinants of municipal efficiency. Our focus thereby is on institutional and fiscal variables. Moreover, the scale efficiency is estimated to find out whether large units are necessary to benefit from scale economies. In contrast to previous studies, we chose the aggregate budget of municipal associations (“Verwaltungsgemeinschaften”) as the object of our analysis since important competences of the member municipalities are settled on a joint administrative level. Furthermore, we use a data set that has been carefully adjusted for bookkeeping items and transfers within the communal level. On the “eve” of a mayor municipal reform the majority of the municipalities were found to have an approximately scale-efficient size and centralized organizational forms (“Einheitsgemeinden”) showed no efficiency advantage over municipal associations.

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.iwh-halle.de/d/publik/disc/18-11.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 18.

as in new window
Length:
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:iwh:dispap:18-11

Contact details of provider:
Postal: Kleine Märkerstrasse 8, 06108 Halle (Saale)
Phone: (0345) 7753-60
Fax: (0345) 7753-820
Web page: http://www.iwh-halle.de
More information through EDIRC

Related research

Keywords: efficiency; local government; DEA; bootstrap; demographic change; local institutions;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

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. Alexander Kalb & Benny Geys & Friedrich Heinemann, 2012. "Value for money? German local government efficiency in a comparative perspective," Applied Economics, Taylor & Francis Journals, vol. 44(2), pages 201-218, January.
  2. Victor M. Giménez & Diego Prior, 2007. "Long- and Short-Term Cost Efficiency Frontier Evaluation: Evidence from Spanish Local Governments," Fiscal Studies, Institute for Fiscal Studies, vol. 28(1), pages 121-139, 03.
  3. Jordahl, Henrik & Liang, Che-Yuan, 2006. "Merged Municipalities, Higher Debt: On Free-riding and the Common Pool Problem in Politics," Ratio Working Papers 107, The Ratio Institute.
  4. von Hirschhausen, Christian R. & Cullmann, Astrid, 2005. "Efficiency Analysis of German Electricity Distribution Utilities : Non-Parametric and Parametric Tests," Dresden Discussion Paper Series in Economics 06/05, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  5. Andrew Worthington & Brian Dollery, 2000. "Efficiency Measurement in the Local Public Sector: Econometric and Mathematical Programming Frontier Techniques," School of Economics and Finance Discussion Papers and Working Papers Series 078, School of Economics and Finance, Queensland University of Technology.
  6. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2010. "Voter involvement, fiscal autonomy and public sector efficiency: Evidence from German municipalities," European Journal of Political Economy, Elsevier, vol. 26(2), pages 265-278, June.
  7. Conrad, Alexander & Neuberger, Doris & Trigo Gamarra, Lucinda, 2009. "The impact of regional and demographic factors on the efficiency of German savings banks," Thuenen-Series of Applied Economic Theory 111, University of Rostock, Institute of Economics.
  8. Peter Nijkamp & Soushi Suzuki, 2009. "A Generalized Goals-achievement Model in Data Envelopment Analysis: an Application to Efficiency Improvement in Local Government Finance in Japan," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(3), pages 249-274.
  9. Fare, R. & Grosskopf, S. & Logan, J., 1985. "The relative performance of publicly-owned and privately-owned electric utilities," Journal of Public Economics, Elsevier, vol. 26(1), pages 89-106, February.
  10. Angel Prieto & José ZofIo, 2001. "Evaluating Effectiveness in Public Provision of Infrastructure and Equipment: The Case of Spanish Municipalities," Journal of Productivity Analysis, Springer, vol. 15(1), pages 41-58, January.
  11. Heikki A. Loikkanen & Ilkka Susiluoto, 2005. "Cost Efficiency of Finnish Municipalities in Basic Service Provision 1994-2002," ERSA conference papers ersa05p37, European Regional Science Association.
  12. 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.
  13. M. Teresa Balaguer-Coll & Diego Prior, 2009. "Short- and long-term evaluation of efficiency and quality. An application to Spanish municipalities," Applied Economics, Taylor & Francis Journals, vol. 41(23), pages 2991-3002.
  14. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  15. Byrnes, Joel & Crase, Lin & Dollery, Brian & Villano, Renato, 2010. "The relative economic efficiency of urban water utilities in regional New South Wales and Victoria," Resource and Energy Economics, Elsevier, vol. 32(3), pages 439-455, August.
  16. De Borger, Bruno & Kerstens, Kristiaan, 1996. "Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA, and econometric approaches," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 145-170, April.
  17. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 11.
  18. Nakil Sung, 2007. "Information technology, efficiency and productivity: evidence from Korean local governments," Applied Economics, Taylor & Francis Journals, vol. 39(13), pages 1691-1703.
  19. Lars-Erik Borge & Marianne Haraldsvik, 2009. "Efficiency potential and determinants of efficiency: An analysis of the care of elderly sector in Norway," Working Paper Series 10109, Department of Economics, Norwegian University of Science and Technology.
  20. Geys, Benny & Moesen, Wim, 2008. "Exploring sources of local government technical inefficiency: evidence from Flemish municipalities," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-18, Social Science Research Center Berlin (WZB).
  21. 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.
  22. Jos Blank & Vivian Valdmanis, 2010. "Environmental factors and productivity on Dutch hospitals: a semi-parametric approach," Health Care Management Science, Springer, vol. 13(1), pages 27-34, March.
  23. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2007. "Local Governments in the Wake of Demographic Change: Efficiency and Economies of Scale in German Municipalities," ZEW Discussion Papers 07-036, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  24. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
  25. Weingast, Barry R., 2009. "Second generation fiscal federalism: The implications of fiscal incentives," Journal of Urban Economics, Elsevier, vol. 65(3), pages 279-293, May.
  26. Simar, L. & Wilson, P.W., 1998. "A General Methodology for Bootstrapping in Nonparametric Frontier Models," Papers 9811, Catholique de Louvain - Institut de statistique.
  27. Anna Montén & Christian Thater, 2010. "Determinants of efficiency in child care provision," Ifo Working Paper Series Ifo Working Paper Nr. 83, Ifo Institute for Economic Research at the University of Munich.
  28. Rodden, Jonathan, 2003. "Reviving Leviathan: Fiscal Federalism and the Growth of Government," International Organization, Cambridge University Press, vol. 57(04), pages 695-729, September.
  29. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
  30. Wyckoff, Paul Gary, 1990. " The Simple Analytics of Slack-Maximizing Bureaucracy," Public Choice, Springer, vol. 67(1), pages 35-47, October.
  31. Matthias Walter & Astrid Cullmann, 2008. "Potential Gains from Mergers in Local Public Transport: An Efficiency Analysis Applied to Germany," Discussion Papers of DIW Berlin 832, DIW Berlin, German Institute for Economic Research.
  32. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  33. Kalb, Alexander, 2009. "What determines local governments' technical efficiency? The case of road maintenance," ZEW Discussion Papers 09-047, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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. Blesse, Sebastian & Baskaran, Thushyanthan, 2013. "Do municipal mergers result in scale economies? Evidence from a German federal state," Center for European, Governance and Economic Development Research Discussion Papers 176, University of Goettingen, Department of Economics.
  2. Peter Haug, 2013. "Grant Dependence, Regulation and the Effects of Formula-based Grant Systems on German Local Governments: A Data Report for Saxony-Anhalt," IWH Discussion Papers 2, Halle Institute for Economic Research.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iwh:dispap:18-11. 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: (Hubert Gabrisch).

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.