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Cover of: The Efficiency of Local Public-Service Production: The Effect of Political Institutions
Peter Bönisch, Peter Haug

The Efficiency of Local Public-Service Production: The Effect of Political Institutions

Section: Articles
Volume 74 (2018) / Issue 2, pp. 260-291 (32)
Published 16.07.2018
DOI 10.1628/fa-2018-0008
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  • 10.1628/fa-2018-0008
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Summary
Reforms replacing municipal cooperations by centralized municipalities often aim at increasing municipal efficiency. Empirical evidence supporting this aim, however, is ambiguous. Our paper analyzes the effect of institutions on municipal efficiency. In particular, we distinguish two archetypal institutional settings, a centralized and a confederal one, and argue that bureaucrats in a centralized setting are able to increase the fiscal residual. Our empirical test case is the German federal state of Saxony-Anhalt. We test the effect of the institutional setup using the bootstrap approach suggested by Simar and Wilson (2007), concluding that a decentralized institutional setting improves the efficiency of municipal production.