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An International Perspective on the Determinants of Local Government Fragmentation

The main questions addressed in this paper are the identification of the main determinants of jurisdictional fragmentation as presently observed across countries and how well those findings line up with the predictions of the expanded standard model of optimal jurisdiction size. To our knowledge, to date, there does not exit a rigorous study analyzing the cross-country determinants of fragmentation in the way this issue has been previously analyzed for some particular countries. At the outset, country fixed effects can be expected to loom large and powerful. Each country with its own history conditioned by a myriad of details, including colonial legacies, geography or ethnic and linguistic fragmentation, are likely to have contributed to heterogeneous levels of fragmentation. These factors could all be summarized in what is often termed the long shadow or the “dead hand” of history. Indeed, some countries may still have the same vertical structure of government that they had many decades ago. But there are also many countries that have changed their governmental structures over the years. So in this paper we would like to find out what may the common determinants that have led to those changes, and also perhaps to help us better understand if those common determinants can also be used to explain why other countries have changed so little. The rest of this paper is organized as follows. In section 2 we offer a simple extension of the conventional model for optimal jurisdiction size. In section 3 we review the literature on government fragmentation and its impact. In section 4 we outline the empirical model proposed for the analysis of jurisdictional fragmentation. In section 5 we present the results from our estimations. We conclude in section 6.

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File URL: http://icepp.gsu.edu/files/2015/03/ispwp1219.pdf
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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1219.

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Length: 51 pages
Date of creation: 31 Mar 2012
Date of revision:
Handle: RePEc:ays:ispwps:paper1219
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Web page: http://aysps.gsu.edu/isp/index.html

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  1. Cameron A. Shelton, 2007. "The Size and Composition of Government Expenditure," Wesleyan Economics Working Papers 2007-002, Wesleyan University, Department of Economics.
  2. Juan Luis Gómez-Reino & Jorge Martinez-Vazquez, 2012. "An International Perspective on the Determinants of Local Government Fragmentation," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1219, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
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  7. Seabright, Paul, 1994. "Accountability and Decentralization in Government: An Incomplete Contracts Model," CEPR Discussion Papers 889, C.E.P.R. Discussion Papers.
  8. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
  9. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2009. "Governance matters VIII : aggregate and individual governance indicators 1996-2008," Policy Research Working Paper Series 4978, The World Bank.
  10. Martinez-Vazquez, Jorge & Rider, Mark & Walker, Mary Beth, 1997. "Race and the Structure of School Districts in the United States," Journal of Urban Economics, Elsevier, vol. 41(2), pages 281-300, March.
  11. Kenny, Lawrence W & Schmidt, Amy B, 1994. " The Decline in the Number of School Districts in the U.S.: 1950-1980," Public Choice, Springer, vol. 79(1-2), pages 1-18, April.
  12. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
  13. Lars P. Feld & Gebhard Kirchgässner & Christoph A. Schaltegger, 2003. "Decentralized Taxation and the Size of Government: Evidence from Swiss State and Local Governments," CESifo Working Paper Series 1087, CESifo Group Munich.
  14. Dasgupta, Basab & Narayan, Ambar & Skoufias, Emmanuel, 2009. "Measuring the quality of education and health services : the use of perception data from Indonesia," Policy Research Working Paper Series 5033, The World Bank.
  15. Mariano Tommasi & Federico Weinschelbaum, 2000. "A Principal-Agent Building Block for the Study of Decentralization and Integration," Econometric Society World Congress 2000 Contributed Papers 0457, Econometric Society.
  16. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2230-2260, December.
  17. Zax, Jeffrey S, 1989. "Is There a Leviathan in Your Neighborhood?," American Economic Review, American Economic Association, vol. 79(3), pages 560-67, June.
  18. Juliet Ann Musso, 2001. "The Political Economy of City Formation in California: Limits to Tiebout Sorting," Social Science Quarterly, Southwestern Social Science Association, vol. 82(1), pages 139-153.
  19. Ellickson, Bryan, 1971. "Jurisdictional Fragmentation and Residential Choice," American Economic Review, American Economic Association, vol. 61(2), pages 334-39, May.
  20. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
  21. Stansel, Dean, 2005. "Local decentralization and local economic growth: A cross-sectional examination of US metropolitan areas," Journal of Urban Economics, Elsevier, vol. 57(1), pages 55-72, January.
  22. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  23. Scott J. Callan & Janet M. Thomas, 2001. "Economies of Scale and Scope: A Cost Analysis of Municipal Solid Waste Services," Land Economics, University of Wisconsin Press, vol. 77(4), pages 548-560.
  24. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, November.
  25. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1203-50, November.
  26. Jorge Martinez-Vazquez & Ming-Hung Yao, 2009. "Fiscal Decentralization and Public Sector Employment: A Cross-Country Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  27. Jorge Martinez-Vazquez & Andrey Timofeev, 2008. "Fiscal Perspective of State Rescaling," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0806, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  28. Grosskopf, S. & Margaritis, D. & Valdmanis, V., 1995. "Estimating output substitutability of hospital services: A distance function approach," European Journal of Operational Research, Elsevier, vol. 80(3), pages 575-587, February.
  29. Panzar, John C & Willig, Robert D, 1977. "Economies of Scale in Multi-Output Production," The Quarterly Journal of Economics, MIT Press, vol. 91(3), pages 481-93, August.
  30. Martinez-Vazquez, Jorge, 1981. "Selfishness versus public `regardingness' in voting behavior," Journal of Public Economics, Elsevier, vol. 15(3), pages 349-361, June.
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