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Do mergers of large local governments reduce expenditures? Evidence from Germany using the synthetic control method

Felix Rösel ()
Authors registered in the RePEc Author Service: Felix Roesel ()

No 224, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: States merge small and medium sized municipalities to achieve economies of scale. Little is known to which extent mergers of large local governments reduce expenditures. I use the synthetic control method to identify the effect of mergers of county-sized administrations in Germany (districts) on public expenditures. In 2008, the German state of Saxony reduced the number of districts from 22 to 10. Average district population increased substantially from 113,000 to 290,000 inhabitants. I construct a "Synthetic Saxony" serving as counterfactual to real Saxony from districts of ten other German states that did not merge districts for years. The results do neither show that district mergers reduce total expenditures per capita, nor expenditures in main expenditure categories such as social care, education or administration. There seems to be no scale effects in jurisdictions of more than 100,000 inhabitants.

Keywords: Bologna Reform; Bachelor introduction; student outcomes; instrumental variables (search for similar items in EconPapers)
JEL-codes: I28 I21 H75 (search for similar items in EconPapers)
Date: 2016
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Related works:
Journal Article: Do mergers of large local governments reduce expenditures? – Evidence from Germany using the synthetic control method (2017) Downloads
Working Paper: Do mergers of large local governments reduce expenditures? - Evidence from Germany using the synthetic control method (2017) Downloads
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