Value for money? German local government efficiency in a comparative perspective

In this article, we investigate the cost efficiency of German local governments in the state of Baden-Württemberg in 2004 using a stochastic frontier approach. Besides being the first study on German data, we add two elements to the literature. First, we provide a comparative perspective, allowing us to embed our results in the broader literature. Second, unlike most previous studies, we explicitly account for exogenous or nondiscretionary influences when estimating municipal efficiency scores. The results suggest that disregarding such exogenous factors can lead to significant and systematic bias in the estimated inefficiency levels. Particularly, underestimation of efficiency occurs for municipalities with high tourist activity, while the reverse is true for municipalities with high unemployment.     

Natural resource windfalls and efficiency in local government expenditure: Evidence from Peru

We study the role of natural resource windfalls in explaining the technical efficiency of public expenditure. Using a rich dataset of expenditure and public good provision for 1836 municipalities in Peru for the period 2001–2010, we estimate a nonmonotonic relationship between the efficiency of public good provision and the level of natural resource transfers. Local governments that were extremely favored by the boom in mineral prices were more efficient in using fiscal windfalls, whereas those that only benefited from modest transfers were more inefficient. These results can be explained by the increase in political competition associated with the boom. However, the fact that increases in efficiency were related to reductions in public good provision casts doubts on the beneficial effects of political competition in promoting efficiency.     

信息技术投资对我国制造企业技术效率影响的区域差异分析——基于面板数据随机前沿分析方法的实证研究

基于我国26个省和直辖市的3440家制造企业的相关数据,运用面板数据随机前沿分析的方法,对我国东、中、西三大区域制造企业信息技术投资对技术效率的影响进行了对比分析。实证研究的结果显示,在考虑信息技术影响的前提下,东部地区与中西部地区制造企业的技术效率出现了差异化增长的情况。最后,从信息技术投资应用的角度分析了出现这种区域差异化增长的原因,并给出了相应的建议。     

Local government efficiency: determinants and spatial interdependence

We analyse the determinants of local government efficiency taking into account the presence of spatial interactions among neighbouring municipalities. To do so, first we estimate an efficiency index using the robust order-m methodology in Valencian municipalities (Spain). Second, we examine the socio-economic, political and budgetary factors that might influence efficiency levels. Finally, we analyse the spatial interactions present in our data. The results of estimating a spatial autoregressive model show that government efficiency in neighbouring municipalities positively affects the local government’s own efficiency. This highlights the importance of considering spatial dependence structures in studies on efficiency in the public sector.     

中国技术市场运行效率：动态演进规律及空间差异特征

基于Malmquist指数法测算2006-2015年中国技术市场运行效率,并利用GeoDa软件对内地30省（市、自治区）的技术市场运行效率值进行空间聚类分析。研究发现：中国技术市场整体运行效率变动呈现上升趋势,在产出不变的情况下,技术市场运行效率每年平均提高7.2%;效率整体上升源于综合技术效率增加,而效率上升幅度不大主要是受到技术变动的拖累;总体上的Moran′s I表明,各省（市、自治区）技术市场的运行效率之间呈现空间负相关关系,聚类分析结果表明东部和东北经济发达地区的空间集聚度较高,而西部地区呈现效率低值集聚;在空间变化特征上,技术市场空间集中度均不一致,其中,经济发展水平低的地区技术市场集中度远低于经济发展水平高的地区,自2012年后技术市场发展渐趋一致。     

The effects of inter-municipal cooperation and central grant allocation on the size of the French local public sector

The analysis of French municipalities’ public personnel expenditures allows us to study the issue of the size of the local public sector. We concentrate on two paths that French authorities have followed to limit it, i.e., the promotion of inter-municipal cooperation (IMC) and the cut in grants received by municipalities. Our objective is to evaluate their respective role in the evolution of public personnel expenditures at the municipal level, in a context where local politics comes into play. We consider a large panel dataset of municipalities embedded in IMC structures between 2011 and 2018. Our main results, obtained using an original identification strategy, are threefold. We first find evidence that a substitution effect between municipal and IMC personnel expenditures is at work. Second, we find a partisan distorsion through the grant allocation: despite its formula-based definition, aligned and unaligned municipalities are treated differently by the central government. Third, we show that cuts in grants lead to cuts in municipalities’ public wage bills, while partisanship hinders such cuts.     

On the determinants of local government performance: A two-stage nonparametric approach

This article analyzes the efficiency of local governments in the Comunitat Valenciana (Spain) and their main explanatory variables. The analysis is performed in two stages. Firstly, efficiency is measured via (nonparametric) activity analysis techniques. Specifically, we consider both Data Envelopment Analysis (DEA) and Free Disposable Hull (FDH) techniques. The second stage identifies some critical determinants of efficiency, focusing on both political and fiscal policy variables. In contrast to previous two-stage research studies, our approach performs the latter attempt via nonparametric smoothing techniques, rather than econometric methods such as OLS or Tobit related techniques. Results show that efficiency scores, especially under the nonconvexity assumption (FDH), are higher for large municipalities. Thus, there is empirical evidence to suggest that resources may be better allocated by large municipalities. However, the inefficiency found is not entirely attributable to poor management, as second-stage analysis reveals both fiscal and political variables to be explicably related to municipality performance. Moreover, the explanatory variables’ impact on efficiency is robust to the chosen technique—either convex DEA or nonconvex FDH.     

税收分权与经济增长——基于省际面板数据的实证分析

通过建立面板数据计量模型,利用1999-2008年中国30个省(自治区、直辖市)的数据(不含西藏和港澳台地区),对税收分权与经济增长之间的关系进行实证分析。结果显示:在中国式财政分权体制下,无论是从全国还是从分区域看,提高税收分权度对经济增长均具有消极作用。其原因并不是税收分权本身对经济增长有消极作用,而是不合理的税收分权制度安排,抵消了分权带来的激励效果。因此,要提高税收分权对经济增长的激励效果,就必须理顺中央与地方间的税权关系,赋予地方一定的税收立法权;理顺中央和地方间的事权关系,明晰各级政府的税权范围;理顺税费关系,规范制度外收入渠道,完善政府间财政转移支付制度。     

Cost efficiency of the Chinese banking sector: A comparison of stochastic frontier analysis and data envelopment analysis

This paper investigates the consistency of efficiency scores obtained from the stochastic frontier analysis and data envelopment analysis methods. We estimate cost efficiency and economies of scale based on an unbalanced panel data set of Chinese banks over the period 1994 to 2007. The results suggest moderate consistency between parametric and non-parametric frontier methods in efficiency scores rankings, identification of best and worst practise banks, the stability of efficiency scores over time and correlation between frontier efficiency and accounting based performance measures. Based on the findings, we conclude that the use of multiple frontier techniques for efficiency analysis is to be strongly recommended and that this methodological cross-checking analysis will result in more robust and convincing assessments of bank performance.     

Re‐Examining the Technical Efficiency of Australian Banks: A Bootstrap DEA Approach

This study re‐examines both pure technical and scale efficiency of Australian banks using bootstrap data envelopment analysis (DEA). The aim is to improve the choice of variables of the core profit efficiency model which is commonly used in earlier Australian banking efficiency studies. After we introduce the “interest income” over “net interest income” variable in the core profit efficiency model, the proportion of fully pure technical efficient banks decreased to 23% which is significantly lower than 81% which was reported in a recent study. This research argues that the main issue that has contributed to this difference is that improving the choice of variables significantly increases the discriminatory power of efficiency estimates. Additionally, emphasising on statistical properties of efficiency estimates, this study employs bootstrap DEA to provide confidence intervals and bias corrected estimates of pure technical efficiency scores of the sample banks. The bootstrap results show the importance of incorporating sample variation and bias in estimating efficiency scores. Earlier Australian banking efficiency studies ignored such issues. The new findings from the sample banks could have important implications for the banking industry in Australia.     

Optimal democratic mechanisms for taxation and public good provision

We study the interdependence of optimal tax and expenditure policies. An optimal policy requires that information on preferences is made available. We first study this problem from a general mechanism design perspective and show that efficiency is possible only if the individuals who decide on public good provision face an own incentive scheme that differs from the tax system. We then study democratic mechanisms with the property that tax payers vote over public goods. Under such a mechanism, efficiency cannot be reached and welfare from public good provision declines as the inequality between rich and poor individuals increases.     

中国上市公司费用“粘性”行为研究

费用“粘性”指当费用随着业务量的变化而变化时 ,其边际变化率在不同的业务量变化方向上的不对称性。本文讨论了费用“粘性”的内容和目前对此的理论解释 :“契约观”、“效率观”和“机会主义观”。通过对 1 995年 1 2月 3 1日前上市的 2 92家公司从1 994— 2 0 0 1年的数据进行的分析 ,本文发现 :(1 )中国上市公司确实存在费用“粘性”。同美国上市公司相比 ,中国上市公司向下调整费用的速度要慢许多 ,这很可能是由于中国企业管理水平的低下和经理层代理成本的高昂。 (2 )费用“粘性”确实在以后的会计期间出现反转。在时间跨度拉长的情况下费用的“粘性”明显降低 ,这说明中国上市公司的经营管理还有一些效率 ,但是效率尚不够高。 (3 )效率观所隐含的“宏观经济增长”和契约观所隐含的“资本密集型”两个变量对费用“粘性”的增强效果不显著 ,这也许说明目前中国上市公司的经理层行为包含了“机会主义观”的因素。     

Measuring Productive Efficiency in Input–Output Models by Means of Data Envelopment Analysis

The goal of the present research is to evaluate productive efficiency in an input–output framework by means of data envelopment analysis (DEA). This mathematical programming technique allows researchers to assess potential efficiency improvements in the form of input requirements reduction. By constructing envelopment unitary isoquants corresponding to comparable sectors across different local, regional or national economies, e.g. agriculture and manufacturing, DEA identifies as productive benchmarks those economies that exhibit the lowest technical coefficients, i.e. lowest input amount to produce one unit of output. Once these reference frontiers have been defined, it is possible to assess what would be the potential efficiency improvements available to the inefficient economies if they were to produce according to the best practice technologies of their benchmark peers. From an equivalent perspective, these simulations identify the necessary changes that each productive sector needs to undertake in order to reach the efficiency levels of the most successful economies. Finally, within Leontief’s analytical construction, these calculations allow us to assess what would have been the economy‐wid,e benefits for the inefficient economies—in terms of intermediate consumption reductions and final demand increases—of producing with best practice technologies. The model is empirically illustrated using the input–output tables for a set of OECD countries.     

Implications of the Polish 1999 administrative reform for regional socio‐economic development

On 1 January 1999, four major reforms took effect in Poland in the areas of health, education, pensions and local administration. After 20 years, only in the last case does the original structural design remain essentially unchanged. We examine the implications of this reform from the perspective of the distance of municipalities from their regional administrative capital. We show that despite fears of negative consequences for peripheral regions, the reform did not result in slower socio‐economic development for those municipalities that found themselves further from the new administrative centres. We argue that regional inclusiveness in the process of development is likely to be an important factor behind the stability of Poland's administrative design.     

Competition in taxes and performance requirements for foreign direct investment

Tax incentives offered to attract firms engaged in foreign direct investment are often tied to performance requirements such as domestic content restrictions or adherence to environmental standards. The tax competition literature has repeatedly shown that competition between municipalities for mobile firms tends to drive taxes to low levels. One would expect a comparable result for burdensome performance requirements. Despite this, the evidence suggests that while taxes have indeed been driven down, performance requirements are as popular as ever. We explain this seeming conundrum by showing that in the presence of spillovers, binding performance requirements can act as a coordination device for firms. In equilibrium, municipalities choose performance requirements, which maximize joint surplus from investment. Competition between municipalities then transfers this surplus to firms via tax subsidies.     

Natural disasters and electoral outcomes

Natural disasters are good examples of catastrophic events that may affect vote decisions. In this study, we analyze how the occurrence of earthquakes changes voters' behavior at municipal elections and which channels drive this change, focusing in particular on the role of media exposure. We exploit data from 13,338 municipal electoral cycles where incumbents seek reelection between 1993 and 2015 in Italy. We apply a difference-in-difference strategy with time and cities fixed effect to the probability of reelection and vote share using three different control groups: the universe of municipalities, a sub-sample of neighboring municipalities, and a sub-sample of municipalities identified by a one-to-one nearest-neighbor propensity score matching procedure. We find that the occurrence of destructive earthquakes significantly increases the incumbent mayors’ chance of being reelected and their vote share. We argue that this result is driven by the incumbent mayor advantage in offering recovery from disaster damages combined with a higher visibility on the media in the aftermath of the disaster. Thus, the mediatic relevance of earthquake occurrence may bias voters towards the incumbent.     

The role of environmental factors in water utilities’ technical efficiency. Empirical evidence from Spanish companies

This article computes input-specific scores of technical efficiency for a sample of water utilities located in the southern Spanish region of Andalusia. In addition, differences in efficiency between different operating environments are investigated. Concerning the debate about ownership and efficiency, we find that privately owned companies outperform public utilities in their management of labour. Furthermore, technical efficiency is found to be greater among firms located in highly populated areas and for utilities providing water services to tourist municipalities. Finally, no empirical evidence supporting the greater technical efficiency of consortia of water utilities, a managerial strategy strongly encouraged by regional politicians, is found.     

Political preferences and public sector outsourcing

Given the intensive and ideologically charged debate over the use of private contractors for publicly funded services, it is somewhat surprising that many social scientists have preferred to explain government outsourcing by the pursuit of economic efficiency. Starting out from different theories, we investigate political explanations of government outsourcing using a Swedish data set in which outsourcing varies between municipalities and over time, as well as between services. Our identification strategy focuses on two services with similar contracting problems and local market conditions: preschools and primary schools. We study a period in which Swedish municipalities had full discretion in the provision of preschools, while their influence on the private provision of primary education was limited by a national voucher system. The comparison of preschools with primary schools in a difference-in-differences model suggests that the political color of the ruling majority influences outsourcing, which is consistent with the Citizen Candidate model of representative democracy.     

Examining the relationship between municipal consolidation and cost reduction: an instrumental variable approach

This study explores the cost-reduction effects of local government consolidation, using data from Japanese municipalities. We use municipal panel data from Japan for the years 2000, 2005 and 2010, a data set including numerous consolidation cases. Reverse causality between consolidation decisions and size of municipal expenditure is a concern in the voluntary consolidation of local governments. An instrumental variable (IV) methodology is employed to deal with possible endogeneity associated with consolidation decisions. The main finding is that municipal current expenditure per capita increases immediately after consolidation, but then gradually declines. Because consolidation seems to increase per capita expenditure in the absence of the effect of this long-term declining trend, incorporating this trend into estimation is crucial in cost-efficiency analysis of consolidation. It is also shown that conventional panel data regressions yield biased consolidation effects, suggesting the superiority of the IV approach.     

Earthquake hazard and civic capital

We examine the empirical relationship between the exposure to earthquake hazard and civic capital in Italian municipalities. Drawing on the Italian National Institute of Geophysics and Volcanology, we find that earthquake hazard increases civic capital. We exploit variation across neighboring municipalities and use a neighbor-pair fixed effect estimator to establish a causal link between earthquake hazard and the accumulation of civic capital. We decompose the effect of earthquake hazard variation along four dimensions – frequency, space, magnitude, and timing – and observe that the effect is mostly explained by high-magnitude seismic events in the past. Our results are in line with the intuition that cooperative social norms build over a very long time span.