Do municipal mergers result in scale economies? Evidence from a German federal state
AbstractThe extant empirical evidence on the fiscal consequences of municipal mergers is ambiguous. We therefore revisit this question by making use of a merger reform in the German federal state of Brandenburg in 2003. In addition to identifying the causal effects of mergers on municipal expenditures by relying on a natural experiment, one novel contribution of our study is to explore the fiscal consequences of both compulsory and voluntary municipal mergers within the same institutional setting. Using a difference-in-difference design with municipality-level panel data (aggregated to post-reform territorial boundaries), we find substantial and immediate reductions in total, administrative and current expenditures per capita after compulsory mergers. Voluntary mergers, on the other hand, have smaller and less robust effects. --
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Bibliographic InfoPaper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 176.
Date of creation: 2013
Date of revision:
municipal mergers; economies of scale; voluntary and compulsory mergers;
Find related papers by JEL classification:
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-12-29 (All new papers)
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