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Some Determinants of Intermediate Local Governments' Spending Efficiency: The Case of French Départements

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  • Maria Nieswand
  • Stefan Seifert

Abstract

Efforts undertaken by France to restructure the allocation of governmental competencies increased the importance of subnational governments by transferring additional tasks. This paper analyzes the efficiency of public spending on an intermediate government level for a sample of 96 départements in metropolitan France in 2008. Spending efficiency is measured using Data Envelopment Analysis (DEA). Results indicate significant room for improvements and detect spending inefficiencies averaging between 10 and 22 percent, depending on model specification. To explain efficiency, a bootstrapped truncated regression, following Simar and Wilson (2007), is applied. The second-stage regression shows that efficiency is also determined by exogenous factors and identifies the distance to the national capital, inhabitants' income and the share of inhabitants of an age over 65 as significant determinants of efficiency.

Suggested Citation

  • Maria Nieswand & Stefan Seifert, 2011. "Some Determinants of Intermediate Local Governments' Spending Efficiency: The Case of French Départements," Discussion Papers of DIW Berlin 1130, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1130
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.372972.de/dp1130.pdf
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    References listed on IDEAS

    as
    1. De Borger, B & Kerstens, K. & Moesen, W. & Vanneste, J., 1994. "Explaining Differences in Productive Efficiency: An Application to Belgian Municipalities," Public Choice, Springer, vol. 80(3-4), pages 339-358, September.
    2. Balaguer-Coll, Maria Teresa & Prior, Diego & Tortosa-Ausina, Emili, 2007. "On the determinants of local government performance: A two-stage nonparametric approach," European Economic Review, Elsevier, vol. 51(2), pages 425-451, February.
    3. VANDEN EECKAUT, Philippe & TULKENS, Henry & JAMAR, Marie-Astrid, 1993. "Cost efficiency in Belgian municipalities," CORE Discussion Papers RP 1033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Isabel Narbón-Perpiñá & Kristof De Witte, 2016. "Local governments’ efficiency: A systematic literature review – Part I," Working Papers 2016/20, Economics Department, Universitat Jaume I, Castellón (Spain).

    More about this item

    Keywords

    Intermediate government spending efficiency; nonparametric efficiency analysis; bootstrapped truncated regression;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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