The size of the size effect. The impact of splits of municipalities on the performance of local governments in Bulgaria, Croatia and Poland

The impact of territorial reforms on local government performance has been the subject of numerous academic research. However, territorial reorganisations in Eastern Europe have been severely under-researched in this respect. More importantly, previous research does not provide an answer as to why the effect of scale is larger in some reforms. In our study, we test the hypothesis of the effect of the population size of the municipality before fragmentation on the financial performance of the new municipalities created. We expect that an economy of scale effect is more likely to be observed when smaller municipalities are split up. The hypothesis is tested using municipal splits in Bulgaria, Croatia and Poland. The independent variable is budget expenditure on administration. Due to the limited number of cases analysed and our focus on differences between individual cases, our empirical strategy is based on models using the quasi-experimental synthetic control method.