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Public sector efficiency and political culture

  • Raffaela Giordano

    ()

    (Bank of Italy)

  • Pietro Tommasino

    ()

    (Bank of Italy)

The capability of a country's public sector to provide high-quality goods and services in a cost-effective way is crucial to fostering long-term growth. In this paper we study the determinants of public service efficiency (PSE) and in particular the role of citizens' political values. Indeed, we argue that citizens' willingness to invest time and effort monitoring public affairs is necessary if policy-makers are to be held accountable for what they do and deterred from wasting public resources. Contrary to other papers, our empirical analysis exploits within-country variation, therefore reducing the risk of omitted variable bias and implicitly controlling for differences in formal institutions. First, we compute PSE measures for several public services (namely education, civil justice, healthcare, childcare and waste disposal) for the 103 Italian provinces; then we show that a higher degree of political engagement increases PSE. This remains true even after controlling for the possible endogeneity of political culture. In our analysis, values specifically related to the political sphere are kept distinct from generically pro-social values. Our results suggest that the latter have no independent impact on PSE.

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 786.

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Date of creation: Jan 2011
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Handle: RePEc:bdi:wptemi:td_786_11
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  1. Afonso, António & Schuknecht, Ludger & Tanzi, Vito, 2003. "Public sector efficiency: an international comparison," Working Paper Series 0242, European Central Bank.
  2. Lars-Erik Borge & Torberg Falch & Per Tovmo, 2008. "Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity, and democratic participation," Public Choice, Springer, vol. 136(3), pages 475-495, September.
  3. Timothy J. Feddersen, 2004. "Rational Choice Theory and the Paradox of Not Voting," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 99-112, Winter.
  4. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
  5. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
  6. Guido de Blasio & Giorgio Nuzzo, 2006. "The Legacy of History for Economic Development: The Case of Putnam's Social Capital," Temi di discussione (Economic working papers) 591, Bank of Italy, Economic Research and International Relations Area.
  7. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 2008. "The Measurement of Productive Efficiency and Productivity Growth," OUP Catalogue, Oxford University Press, number 9780195183528, December.
  8. Romina Boarini, 2009. "Towards better Schools and more Equal Opportunities for Learning in Italy," OECD Economics Department Working Papers 727, OECD Publishing.
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