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Incentive Schemes for Local Government: Theory and Evidence from Comprehensive Performance Assessment in England

Author

Listed:
  • Ben Lockwood
  • Francesco Porcelli

Abstract

This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a theoretical political agency model, we predict that CPA should increase service quality and local taxation, but have an ambiguous effect on the efficiency of service provision. We test these predictions using Welsh local governments as a control group: CPA increased the property tax, and our index of service quality, but had no significant effect on efficiency overall. There is evidence of a heterogenous effect of CPA: it impacted more on councils where electoral competition was initially weak, in line with our theory.

Suggested Citation

  • Ben Lockwood & Francesco Porcelli, 2013. "Incentive Schemes for Local Government: Theory and Evidence from Comprehensive Performance Assessment in England," American Economic Journal: Economic Policy, American Economic Association, vol. 5(3), pages 254-286, August.
    • Handle: RePEc:aea:aejpol:v:5:y:2013:i:3:p:254-86
    Note: DOI: 10.1257/pol.5.3.254
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    Cited by:

    1. Ben Lockwood & Francesco Porcelli & Michela Redoano & Antonio Schiavone & Benjamin Lockwood, 2022. "Does Data Disclosure Improve Local Government Performance? Evidence from Italian Municipalities," CESifo Working Paper Series 10155, CESifo.
    2. Alessandro Gavazza & Mattia Nardotto & Tommaso Valletti, 2019. "Internet and Politics: Evidence from U.K. Local Elections and Local Government Policies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(5), pages 2092-2135.
    3. Asatryan, Zareh & Heinemann, Friedrich & Yeter, Mustafa & Rubio, Eulalia & Rinaldi, David & Zuleeg, Fabian, 2016. "Public sector reform: How the EU budget is used to encourage it. Study," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 147039.
    4. Wahid Abdallah, 2017. "Electronic filing System, Bureaucratic Efficiency and Public Service Delivery: Evidence from Bangladesh," Working Papers id:12223, eSocialSciences.
    5. Chen, Yvonne Jie & Li, Pei & Lu, Yi, 2018. "Career concerns and multitasking local bureaucrats: Evidence of a target-based performance evaluation system in China," Journal of Development Economics, Elsevier, vol. 133(C), pages 84-101.
    6. Ivo Bischoff & Frédéric Blaeschke, 2013. "Incentives and Influence Activities in the Public Sector: the Trade-off in Performance Budgeting and Conditional Grants," MAGKS Papers on Economics 201320, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. Guglielmo Barone & Guido de Blasio & Alessio D'Ignazio & Andrea Salvati, 2017. "Incentives to local public service provision: an evaluation of Italy�s Obiettivi di Servizio," Questioni di Economia e Finanza (Occasional Papers) 388, Bank of Italy, Economic Research and International Relations Area.
    8. Madhusudhan B. V. Rao & Sridhar R. Prasad & Sowmya J. & Abida U. C., 2024. "Does Child-friendly Gram Panchayats Mean Good Governance? An Analysis of 10 Gram Panchayats in Karnataka," Journal of Development Policy and Practice, , vol. 9(1), pages 107-132, January.
    9. Gersbach Hans, 2012. "Contractual Democracy," Review of Law & Economics, De Gruyter, vol. 8(3), pages 823-851, December.
    10. Ivo Bischoff & Frédéric Blaeschke, 2012. "Window-Dressing and Lobbying in Performance-Budgeting: a Model for the Public Sector," MAGKS Papers on Economics 201212, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    11. Gerdes, Christer, 2015. "Does Performance Information Affect Job Seekers in Selecting Private Providers in Voucher-Based ALMP Programs?," IZA Discussion Papers 8992, Institute of Labor Economics (IZA).
    12. Ben Lockwood & Francesco Porcelli, 2013. "Incentive Schemes for Local Government," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(1), pages 55-63, 04.
    13. José M. Alonso & Rhys Andrews, 2025. "Does not‐for‐profit corporatization of local public services improve performance?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 44(2), pages 612-631, March.
    14. repec:ces:ifodic:v:11:y:2013:i:1:p:19078519 is not listed on IDEAS
    15. Tang, Meng, 2025. "Industrialize with tax structure change: Agricultural tax abolition and local industrial growth in China," China Economic Review, Elsevier, vol. 90(C).
    16. Ben Lockwood & Francesco Porcelli, 2013. "Incentive Schemes for Local Government," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(01), pages 55-63, April.
    17. Maria Alessandra Antonelli & Veronica Grembi, 2014. "Central Targets and local Agendas: Missing Lisbon 2010," Public Finance Research Papers 6, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.

    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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    1. Incentive Schemes for Local Government: Theory and Evidence from Comprehensive Performance Assessment in England (American Economic Journal: Economic Policy 2013) in ReplicationWiki

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