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Do municipal mergers reduce costs? Evidence from a German federal state

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  • Blesse, Sebastian
  • Baskaran, Thushyanthan

Abstract

We study the fiscal consequences of municipal mergers by making use of a largescale merger reform in the German federal state of Brandenburg. In addition to being the first evaluation of an East-German merger reform, this study contributes to the literature by exploring the fiscal consequences of both compulsory and (semi-) voluntary municipal mergers within the same institutional setting. Using a difference-in-difference design with municipality-level panel data over 1998-2005, we find substantial and immediate reductions in total, administrative, and current expenditures after compulsory mergers. Voluntary mergers, on the other hand, have smaller and less robust effects.

Suggested Citation

  • Blesse, Sebastian & Baskaran, Thushyanthan, 2014. "Do municipal mergers reduce costs? Evidence from a German federal state," Center for European, Governance and Economic Development Research Discussion Papers 176 [rev.], University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:176r
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    More about this item

    Keywords

    municipal mergers; economies of scale; voluntary and compulsory mergers;
    All these keywords.

    JEL classification:

    • 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
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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