Local territorial reform and regional spending efficiency

Antonio Afonso and Ana Venâncio ()

Local Government Studies, 2020, vol. 46, issue 6, 888-910

Abstract: We study the effect of a Portuguese structural reform, which reduced the number of parishes, on municipality spending efficiency between 2011 and 2016. We build a composite output indicator and use Data Envelopment Analysis (DEA) to compute efficiency scores. Then, we use a second-stage regression to evaluate the effect of the reform on municipal efficiency after controlling for socio-demographic, political and economic factors. Overall, we find efficiency gains in approximately 10% of municipalities. In some regions (e.g., Alentejo and Centro), more than 50% of the municipalities improved efficiency. The second-stage results show that the structural reform did not improve local spending efficiency in Mainland Portugal, particularly in the Centro, Lisbon and Vale do Tejo regions.

Date: 2020
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Working Paper: Local territorial reform and regional spending efficiency (2019)
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DOI: 10.1080/03003930.2019.1690995

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