One or Two Tiers of Local Government? – The Cost Effects of a Regional Experiment

Antti Moisio and Kari Hämäläinen

No 65, Working Papers from VATT Institute for Economic Research

Abstract: This paper evaluates the cost effects of a Finnish regional self-government experiment. The experiment introduced a new intermediate tier of local administration that was given the responsibility to organize 60 per cent of public services. These services include e.g. basic health care, the majority of social services and secondary education, services that are typically provided by municipalities in Finland. Follow-up reports suggest that the experiment has resulted in massive cost-saving, especially in the social and health sectors. This paper puts previous findings under scrutiny by utilizing a synthetic control method for comparative case studies. Our findings cast serious doubts on the magnitude of the cost savings.

Keywords: regional experiment, case study, synthetic control method, local government, Local public economics, Kunnallistalous, Regional development, Aluekehitys, Effectiveness of public services, Julkisten palvelujen vaikuttavuus, H700 - State and Local Government; Intergovernmental Relations: General, R500 - Regional Government Analysis: General, (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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