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Explaining differences in efficiency. A meta-study on local government literature

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  • Aiello, Francesco
  • Bonanno, Graziella
  • Capristo, Luigi

Abstract

This paper reviews the literature on local government efficiency by meta-reviewing 360 observations retrieved from 54 papers published from 1993 to 2016. The meta-regression is based on a random effect model estimated with the 2-step Random Effects Maximum Likelihood (REML) technique proposed by Gallet and Doucouliagos (2014). Results indicate that the study design matters when estimating a frontier in local government. We find that studies focusing on technical efficiency provide higher efficiency scores than works evaluating cost efficiency. The same applies when using panel data instead of cross-section data. Interestingly, studies that use the Free Disposal Hull (FDH) approach yield, on average, higher efficiency scores than papers employing the Data Envelopment Analysis (DEA) method, thereby suggesting that in this literature the convexity hypothesis of the production set is a matter. Finally, the efficiency of local government increases with the level of development of the analysed countries and is positively related to the national integrity of the legal system. The opposite holds when considering the corruption.

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  • Aiello, Francesco & Bonanno, Graziella & Capristo, Luigi, 2018. "Explaining differences in efficiency. A meta-study on local government literature," MPRA Paper 88982, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88982
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    More about this item

    Keywords

    municipalities; local government; meta-analysis; efficiency; frontier models; convexity; institution;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy

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