IDEAS home Printed from https://ideas.repec.org/p/ipu/wpaper/59.html
   My bibliography  Save this paper

Does Inter-municipal Cooperation promote efficiency gains? Evidence from Italian Municipal

Author

Listed:
  • Massimiliano Ferraresi

    (European Commission - DG JRC Directorate I Competences - Modelling, Indicators and Impact Evaluation Unit)

  • Giuseppe Migali

    (Lancaster University Management School)

  • Leonzio Rizzo

    (Università di Ferrara)

Abstract

Inter-municipal cooperation is a widespread phenomenon among municipalities as a way to provide local public services, exploit economies of scale and internalise externalities. While the determinants driving the decision to cooperate have been deeply analyzed in the literature, little is known about possible efficiency gains. We test their existence in terms of local public expenditures reductions by investigating the Italian experience of Municipal Unions. We exploit unique administrative data on 335 municipalities located in the Emilia Romagna region, for the period 2001-2011. Using a difference-in-differences approach combined with matching models, we find that being in a Municipal Union reduces the total per capita current expenditures by around 5%. The effect is robust, persistent and increasing up to nine years after entrance. Furthermore, joining a Municipal Union does not reduce the level of local public services. Hence, the Municipal Union is an effective tool that allows municipalities to gain efficiency.

Suggested Citation

  • Massimiliano Ferraresi & Giuseppe Migali & Leonzio Rizzo, 2017. "Does Inter-municipal Cooperation promote efficiency gains? Evidence from Italian Municipal," Working papers 59, Società Italiana di Economia Pubblica.
    • Handle: RePEc:ipu:wpaper:59
    as

    Download full text from publisher

    File URL: http://www.siepweb.it/siep/wp/wp-content/uploads/repec/1496753125Ferraresi_et_al_WP_SIEP_725.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Reingewertz, Yaniv, 2012. "Do municipal amalgamations work? Evidence from municipalities in Israel," Journal of Urban Economics, Elsevier, vol. 72(2), pages 240-251.
    2. Narendranathan, W & Stewart, Mark B, 1993. "How Does the Benefit Effect Vary as Unemployment Spells Lengthen?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(4), pages 361-381, Oct.-Dec..
    3. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
    4. Saarimaa, Tuukka & Tukiainen, Janne, 2015. "Common pool problems in voluntary municipal mergers," European Journal of Political Economy, Elsevier, vol. 38(C), pages 140-152.
    5. Edoardo Di Porto & Angela Parenti & Sonia Paty & Zineb Abidi, 2017. "Local government cooperation at work: a control function approach," Journal of Economic Geography, Oxford University Press, vol. 17(2), pages 435-463.
    6. Edoardo Di Porto & Vincent Merlin & Sonia Paty, 2013. "Cooperation among local governments to deliver public services: a "structural" bivariate response model with fixed effects and endogenous covariate," Post-Print halshs-00861226, HAL.
    7. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
    8. Germà Bel & Mildred E. Warner, 2016. "Factors explaining inter-municipal cooperation in service delivery: a meta-regression analysis," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 19(2), pages 91-115, April.
    9. Feld, Lars P. & Fritz, Benedikt, 2015. "The political economy of municipal amalgamation: Evidence of common pool effects and local public debt," Freiburg Discussion Papers on Constitutional Economics 15/10, Walter Eucken Institut e.V..
    10. David M. Brasington, 2003. "Size and School District Consolidation: Do Opposites Attract?," Economica, London School of Economics and Political Science, vol. 70(280), pages 673-690, November.
    11. Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-138, February.
    12. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    13. Blesse, Sebastian & Baskaran, Thushyanthan, 2016. "Do municipal mergers reduce costs? Evidence from a German federal state," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 54-74.
    14. Niklas Hanes, 2015. "Amalgamation Impacts on Local Public Expenditures in Sweden," Local Government Studies, Taylor & Francis Journals, vol. 41(1), pages 63-77, January.
    15. Frederic Blaeschke, 2014. "What drives small municipalities to cooperate? Evidence from Hessian municipalities," MAGKS Papers on Economics 201414, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    16. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(2), pages 261-294.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Massimiliano Ferraresi & Gianluca Gucciardi & Leonzio Rizzo, 2017. "Does purchase centralization reduce public expenditure? Evidence from the Italian healthcare system," Working papers 66, Società Italiana di Economia Pubblica.
    2. Blesse Sebastian & Rösel Felix, 2017. "Was bringen kommunale Gebietsreformen?: Kausale Evidenz zu Hoffnungen, Risiken und alternativen Instrumenten," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 18(4), pages 307-324, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blesse Sebastian & Rösel Felix, 2017. "Was bringen kommunale Gebietsreformen?: Kausale Evidenz zu Hoffnungen, Risiken und alternativen Instrumenten," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 18(4), pages 307-324, November.
    2. Hitoshi Saito & Haruaki Hirota & Hideo Yunoue & Miki Miyaki, 2023. "Do municipal mergers internalise spatial spillover effects? empirical evidence from Japanese municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(2), pages 379-406, April.
    3. Tavares Antonio F., 2018. "Municipal amalgamations and their effects: a literature review," Miscellanea Geographica. Regional Studies on Development, Sciendo, vol. 22(1), pages 5-15, March.
    4. Roesel, Felix, 2017. "Do mergers of large local governments reduce expenditures? – Evidence from Germany using the synthetic control method," European Journal of Political Economy, Elsevier, vol. 50(C), pages 22-36.
    5. Massimiliano Ferraresi & Umberto Galmarini & Leonzio Rizzo, 2018. "Infrastructure spillovers and strategic interaction: does the size matter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(1), pages 240-272, February.
    6. Sebastian Blesse & Felix Roesel, 2019. "Merging county administrations – cross-national evidence of fiscal and political effects," Local Government Studies, Taylor & Francis Journals, vol. 45(5), pages 611-631, September.
    7. Allers, Maarten & van Ommeren, Bernard & Geertsema, Bieuwe, 2015. "Does intermunicipal cooperation create inefficiency? A comparison of interest rates paid by intermunicipal organizations, amalgamated municipalities and not recently amalgamated municipalities," Research Report 15003-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    8. Hirota, Haruaki & Yunoue, Hideo, 2020. "Public investment and the fiscal common pool problem on municipal mergers in Japan," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 124-135.
    9. Massimiliano Ferraresi & Gianluca Gucciardi & Leonzio Rizzo, 2017. "Does purchase centralization reduce public expenditure? Evidence from the Italian healthcare system," Working papers 66, Società Italiana di Economia Pubblica.
    10. Agrawal, David R., 2016. "Local fiscal competition: An application to sales taxation with multiple federations," Journal of Urban Economics, Elsevier, vol. 91(C), pages 122-138.
    11. Hirota, Haruaki & Iwata, Kazuyuki & Tanaka, Kenta, 2022. "Is public official training effective at reducing costs? Evidence from survey data on Japanese municipal mergers," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 145-158.
    12. repec:ces:ifodre:v:24:y:2016:i:04:p:45-49 is not listed on IDEAS
    13. Hirota, Haruaki & Yunoue, Hideo, 2017. "Evaluation of the fiscal effect on municipal mergers: Quasi-experimental evidence from Japanese municipal data," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 132-149.
    14. Blesse, Sebastian & Baskaran, Thushyanthan, 2016. "Do municipal mergers reduce costs? Evidence from a German federal state," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 54-74.
    15. Feld, Lars P. & Fritz, Benedikt, 2015. "The political economy of municipal amalgamation: Evidence of common pool effects and local public debt," Freiburg Discussion Papers on Constitutional Economics 15/10, Walter Eucken Institut e.V..
    16. Pedro S. Martins, 2009. "Dismissals for Cause: The Difference That Just Eight Paragraphs Can Make," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 257-279, April.
    17. Germà Bel & Mildred E. Warner, 2016. "Factors explaining inter-municipal cooperation in service delivery: a meta-regression analysis," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 19(2), pages 91-115, April.
    18. Pengju Zhang, 2023. "The fiscal and economic impacts of municipal dissolution: evidence from New York," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 948-1001, August.
    19. Harjunen, Oskari & Saarimaa, Tuukka & Tukiainen, Janne, 2021. "Political representation and effects of municipal mergers," Political Science Research and Methods, Cambridge University Press, vol. 9(1), pages 72-88, January.
    20. Lothar Grall, 2016. "Geography, Parental Investment, and Comparative Economic Development," MAGKS Papers on Economics 201646, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    21. Felix Rösel, 2016. "Sparen Gebietsreformen Geld? – Ein Überblick über aktuelle Studien," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 23(04), pages 45-49, August.

    More about this item

    Keywords

    Municipal Union cooperation; public expenditure; difference-in-differences; matching;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipu:wpaper:59. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Monica Bozzano (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.