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Assessing the impact of municipal mergers on local public expenditure dynamics in Italy

Author

Listed:
  • Carlo Caporali

    (Gran Sasso Science Institute)

  • Francesco Scotti

    (Politecnico di Milano)

  • Giovanni Baiocchetti

    (Università degli Studi di Milano)

  • Alessandra Faggian

    (Gran Sasso Science Institute)

Abstract

Ever-changing territorial challenges might require administrative bodies to evolve their boundaries and functions in order to adapt to new conditions. Despite the importance of mergers, the literature on the topic is rather limited and does not provide a clear and comprehensive picture of the effects of municipality mergers for several reasons. Italy is the European country that experienced the lowest number of municipal mergers in recent years, and existing evidence does not provide a complete overview of their impact. We fill this gap by analyzing the causal effects of municipal mergers on the local public expenditure dynamics over 2016-2020. We find that the larger financial capacity was not used to reduce fiscal pressure nor the cost of local services, whereas merged municipalities increased their current expenditures - particularly in education, tourism, and transportation - with high geographical heterogeneity.

Suggested Citation

  • Carlo Caporali & Francesco Scotti & Giovanni Baiocchetti & Alessandra Faggian, 2026. "Assessing the impact of municipal mergers on local public expenditure dynamics in Italy," Discussion Paper series in Regional Science & Economic Geography 2025-02, Gran Sasso Science Institute, Social Sciences, revised Feb 2026.
    • Handle: RePEc:ahy:wpaper:wp64
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    Keywords

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    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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