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Assessing and explaining the relative efficiency of local government

Antonio Afonso and Sónia Fernandes

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2008, vol. 37, issue 5, 1946-1979

Abstract: We assess the relative efficiency of local municipalities using Data Envelopment Analysis and parametric analysis. As an output measure we compute a composite local government indicator of municipal performance, using data for Portuguese municipalities. This allows assessing the extent of possible municipal improvement relative to the "best-practice" frontier. Our results suggest that most municipalities could improve performance without necessarily increasing municipal spending. In a second stage efficiency scores are explained by means of a Tobit analysis with a set of relevant explanatory socio-economic factors playing the role of non-discretionary inputs, such as education and per capita purchasing power.

Keywords: Local; government; Technical; efficiency; Socio-economic; factors; DEA; Tobit (search for similar items in EconPapers)
Date: 2008
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