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The relevance of commuting zones for regional spending efficiency

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  • António Afonso
  • Ana Venâncio

Abstract

We use data envelopment analysis (DEA) efficiency scores to show that clustering municipalities into encompassing regional clusters improves spending efficiency of single stand-alone municipalities. We propose a new geographic aggregation based on municipalities-to-municipalities commuting flows, defined using hierarchical cluster analysis. Our example for Portugal shows that from an output-oriented perspective between 83% and 98% of municipalities would increase their efficiency scores, while from an input-oriented perspective between 86% and 98% of municipalities would also be better off in terms of efficiency. Then using a linear regression model, we find that population increases positively affects the efficient scores (via scale economies). Also, increases in the share of high-educated and poorer residents leads to higher efficiency scores.

Suggested Citation

  • António Afonso & Ana Venâncio, 2016. "The relevance of commuting zones for regional spending efficiency," Applied Economics, Taylor & Francis Journals, vol. 48(10), pages 865-877, February.
    • Handle: RePEc:taf:applec:v:48:y:2016:i:10:p:865-877
    DOI: 10.1080/00036846.2015.1088145
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    Cited by:

    1. Andrea Batch & Benjamin R. Bridgman & Abe C. Dunn & Mahsa Gholizadeh, 2023. "Consumption Zones," BEA Papers 0114, Bureau of Economic Analysis.
    2. repec:bea:wpaper:0208 is not listed on IDEAS
    3. António Afonso & Ana Venâncio, 2022. "Local Property Tax Reform and Municipality Spending Efficiency," CESifo Working Paper Series 9538, CESifo.
    4. Schiavone, Ansel, 2023. "Labor market concentration and labor share dynamics for US regional industries," Economic Modelling, Elsevier, vol. 125(C).
    5. Ettore Panetti & Edoardo M. Acabbi, 2019. "The Financial Channels of Labor Rigidities: Evidence from Portugal," Working Papers w201915, Banco de Portugal, Economics and Research Department.
    6. Javier Díaz Castro & Justo de Jorge Moreno, 2017. "Análisis de la eficiencia y factores explicativos de la gestión de los municipios del Meta, Colombia," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 10(1), pages 211-234, November.
    7. D'Inverno, Giovanna & Carosi, Laura & Ravagli, Letizia, 2018. "Global public spending efficiency in Tuscan municipalities," Socio-Economic Planning Sciences, Elsevier, vol. 61(C), pages 102-113.
    8. Javier Díaz Castro & Justo de Jorge Moreno, 2018. "Análisis de la eficiencia y factores explicativos de la gestión de los municipios del Meta, Colombia," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 10(1), pages 211-234, March.

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    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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