The relevance of commuting zones for regional spending efficiency |
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Authors: | António Afonso Ana Venâncio |
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Institution: | 1. Department of Economics, ISEG/ULisbon – University of Lisbon, Lisbon, Portugal;2. Research Unit on Complexity and Economics, UECE, Lisbon, Portugalaafonso@iseg.ulisboa.pt;4. Department of Management, ISEG/ULisbon – University of Lisbon, Lisbon, Portugal;5. Centro de Investiga??o Avan?ada em Gest?o do ISEG, ADVANCE, Lisbon, Portugal |
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Abstract: | We use data envelopment analysis (DEA) efficiency scores to show that clustering municipalities into encompassing regional clusters improves spending efficiency of single stand-alone municipalities. We propose a new geographic aggregation based on municipalities-to-municipalities commuting flows, defined using hierarchical cluster analysis. Our example for Portugal shows that from an output-oriented perspective between 83% and 98% of municipalities would increase their efficiency scores, while from an input-oriented perspective between 86% and 98% of municipalities would also be better off in terms of efficiency. Then using a linear regression model, we find that population increases positively affects the efficient scores (via scale economies). Also, increases in the share of high-educated and poorer residents leads to higher efficiency scores. |
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Keywords: | Public spending efficiency local government data envelopment analysis (DEA) commuting zones |
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