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Does the method adopted for distribution of services by amalgamating municipalities affect expenditure after amalgamation? Evidence from Japan

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  • Katsuyoshi Nakazawa

    ()
    (University of Toyo)

  • Tomohisa Miyashita

    (PHP research institute)

Abstract

Municipal boundary reform (municipal amalgamation) has been done in many countries in recent years as the result of a push to enlarge the size and coverage of local government units, which in turn is driven mainly by the prospect of economies of scale. However, in a notable body of previous literature, the enlargement of local government has not led to reduction of public expenditures. Decision-making before amalgamation might affect to public expenditure after amalgamation. This study uses Japanese municipal-level data and argues for a relation between the choice of public administration distribution method and expenditure after amalgamation. The results show that a plan for distributed or decentralized facility method is more likely to be adopted in a larger administrative jurisdiction and in one with large differences in finances or political structures between amalgamated sub-regions. In turn, a plan for distributed facilities has the effect of pushing up administrative expenditure.Length: 12 pages

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Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201315.

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Date of creation: 2013
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Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201315

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Keywords: local government amalgamation; consensus-building; multinomial logistic regression; local government expenditure;

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  1. Jordahl, Henrik & Liang, Che-Yuan, 2006. "Merged Municipalities, Higher Debt: On Free-riding and the Common Pool Problem in Politics," Working Paper Series 2006:27, Uppsala University, Department of Economics.
  2. Brueckner, Jan K., 1981. "Congested public goods: The case of fire protection," Journal of Public Economics, Elsevier, vol. 15(1), pages 45-58, February.
  3. Duncombe, William & Yinger, John, 1993. "An analysis of returns to scale in public production, with an application to fire protection," Journal of Public Economics, Elsevier, vol. 52(1), pages 49-72, August.
  4. Reingewertz, Yaniv, 2012. "Do municipal amalgamations work? Evidence from municipalities in Israel," Journal of Urban Economics, Elsevier, vol. 72(2), pages 240-251.
  5. Liner, Gaines H, 1994. " Institutional Constraints, Annexation and Municipal Efficiency in the 1960s," Public Choice, Springer, vol. 79(3-4), pages 305-23, June.
  6. Tyrefors Hinnerich, Björn, 2009. "Do merging local governments free ride on their counterparts when facing boundary reform?," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 721-728, June.
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