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What determines local governments' technical efficiency? The case of road maintenance

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  • Kalb, Alexander

Abstract

In this paper we investigate the determinants of local governments' technical efficiency in road maintenance for a panel of German counties using a broad variety of estimation approaches. More specifically, we calculate efficiency indices using non-parametric (DEA) and parametric (stochastic frontier analysis) reference technologies, and examine how these efficiency indices can be explained by estimating and comparing four different regression models. The results of our analysis show that (controlling for numerous characteristics of the counties) the disposable income of the counties' citizens, intergovernmental grants (for county roads), and the payments to the counties influence efficiency negatively. Concerning political variables we find weak evidence that efficiency decreases with an increasing share of seats of left-wing parties in the county council; the hypothesis that efficiency decreases with the degree of political concentration in the county council could not be confirmed.

Suggested Citation

  • Kalb, Alexander, 2009. "What determines local governments' technical efficiency? The case of road maintenance," ZEW Discussion Papers 09-047, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:09047
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    References listed on IDEAS

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    1. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2010. "Voter involvement, fiscal autonomy and public sector efficiency: Evidence from German municipalities," European Journal of Political Economy, Elsevier, vol. 26(2), pages 265-278, June.
    2. Besley, Timothy J. & Persson, Torsten & Sturm, Daniel M, 2005. "Political Competition and Economic Performance: Theory and Evidence from the United States," CEPR Discussion Papers 5138, C.E.P.R. Discussion Papers.
    3. Nakil Sung, 2007. "Information technology, efficiency and productivity: evidence from Korean local governments," Applied Economics, Taylor & Francis Journals, vol. 39(13), pages 1691-1703.
    4. Heikki Loikkanen & Ilkka Susiluoton, "undated". "Cost Efficiency of Finnish Municipalities in Basic Service Provision 1994-2002," Regional and Urban Modeling 283600056, EcoMod.
    5. Kalb, Alexander, 2008. "The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities," ZEW Discussion Papers 08-051, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Geys, Benny, 2006. "Looking across borders: A test of spatial policy interdependence using local government efficiency ratings," Journal of Urban Economics, Elsevier, vol. 60(3), pages 443-462, November.
    7. 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.
    8. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
    9. Victor M. Giménez & Diego Prior, 2007. "Long- and Short-Term Cost Efficiency Frontier Evaluation: Evidence from Spanish Local Governments," Fiscal Studies, Institute for Fiscal Studies, vol. 28(1), pages 121-139, March.
    10. Afonso, António & Fernandes, Sónia, 2008. "Assessing and explaining the relative efficiency of local government," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 1946-1979, October.
    11. Grossman, Philip J. & Mavros, Panayiotis & Wassmer, Robert W., 1999. "Public Sector Technical Inefficiency in Large U.S. Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 278-299, September.
    12. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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    Cited by:

    1. Jan Kluge & Gunther Markwardt & Christian Thater, 2015. "Self-preserving Leviathans - Evidence from Regional-level Data," CESifo Working Paper Series 5177, CESifo Group Munich.
    2. repec:bla:kyklos:v:70:y:2017:i:4:p:594-621 is not listed on IDEAS
    3. Alexander Kalb & Benny Geys & Friedrich Heinemann, 2012. "Value for money? German local government efficiency in a comparative perspective," Applied Economics, Taylor & Francis Journals, vol. 44(2), pages 201-218, January.

    More about this item

    Keywords

    Technical efficiency; road maintenance; stochastic frontier analysis; data envelopment analysis; German counties;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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