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Incentive Schemes for Local Government : Theory and Evidence from Comprehensive Performance Assessment in England


  • Lockwood, Ben

    (University of Warwick)

  • Porcelli, Francesco

    (University of Warwick)


This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a simple theoretical political agency model, we predict that CPA should increase service quality and local taxation, but have an ambiguous e¤ect on the e¢ ciency of service provision. We test these predictions using a difference in difference approach, using Welsh local authorities as a control group, exploiting the fact that local authorities in Wales were not subject to the same CPA regime. To do this, we construct original indices of service quality and e¢ ciency, using Best Value Performance Indicators. We estimate that CPA increased the effective band D council tax rate in England relative to Wales by 4%, and increased our index of service quality output also by about 4%, but had no signifcant effect on our efficiency indices. There is evidence of heterogenous effects of CPA on efficiency, with some evidence that CPA impacted more on less efficient councils, and the "harder test" from 2005-8 having a much bigger effect. Key words: local government ; incentives ; efficiency ; difference in difference ; DEA JEL classification: H10 ; H70 ; H77 ; C21

Suggested Citation

  • Lockwood, Ben & Porcelli, Francesco, 2011. "Incentive Schemes for Local Government : Theory and Evidence from Comprehensive Performance Assessment in England," The Warwick Economics Research Paper Series (TWERPS) 960, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:960

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    References listed on IDEAS

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    Cited by:

    1. Guglielmo Barone & Guido de Blasio & Alessio D'Ignazio & Andrea Salvati, 2017. "Incentives to local public service provision: an evaluation of Italy’s Obiettivi di Servizio," Questioni di Economia e Finanza (Occasional Papers) 388, Bank of Italy, Economic Research and International Relations Area.
    2. repec:ces:ifodic:v:11:y:2013:i:1:p:19078519 is not listed on IDEAS
    3. Maria Alessandra Antonelli & Veronica Grembi, 2014. "Central Targets and local Agendas: Missing Lisbon 2010," Public Finance Research Papers 6, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome.
    4. Gavazza, Alessandro & Nardotto, Mattia & Valletti, Tommaso, 2015. "Internet and Politics: Evidence from U.K. Local Elections and Local Government Policies," CEPR Discussion Papers 10991, C.E.P.R. Discussion Papers.
    5. Asatryan, Zareh & Heinemann, Friedrich & Yeter, Mustafa & Rubio, Eulalia & Rinaldi, David & Zuleeg, Fabian, 2016. "Public sector reform: How the EU budget is used to encourage it. Study," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 147039.
    6. Ben Lockwood & Francesco Porcelli, 2013. "Incentive Schemes for Local Government," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(1), pages 55-63, 04.
    7. Wahid Abdallah, 2017. "Electronic filing System, Bureaucratic Efficiency and Public Service Delivery: Evidence from Bangladesh," Working Papers id:12223, eSocialSciences.
    8. Ivo Bischoff & Frédéric Blaeschke, 2013. "Incentives and Influence Activities in the Public Sector: the Trade-off in Performance Budgeting and Conditional Grants," MAGKS Papers on Economics 201320, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Ivo Bischoff & Frédéric Blaeschke, 2012. "Window-Dressing and Lobbying in Performance-Budgeting: a Model for the Public Sector," MAGKS Papers on Economics 201212, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    10. Gersbach Hans, 2012. "Contractual Democracy," Review of Law & Economics, De Gruyter, vol. 8(3), pages 823-851, December.
    11. Gerdes, Christer, 2015. "Does Performance Information Affect Job Seekers in Selecting Private Providers in Voucher-Based ALMP Programs?," IZA Discussion Papers 8992, Institute for the Study of Labor (IZA).

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    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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