Does inter-municipal cooperation increase efficiency? Evidence from Italy

Giuseppe Gori, Patrizia Lattarulo, Francesco Porcelli, Leonzio Rizzo () and Riccardo Secomandi
Additional contact information
Giuseppe Gori: Istituto Regionale di Programmazione Economica della Toscana - IRPET
Patrizia Lattarulo: Istituto Regionale di Programmazione Economica della Toscana - IRPET
Leonzio Rizzo: Università degli Studi di Ferrara & IEB
Riccardo Secomandi: Università degli Studi di Ferrara

Working papers from Società Italiana di Economia Pubblica

Abstract: Evidence on the impact of municipal amalgamation and cooperation is mixed and most of the existing literature is focused on the effect on the cost per capita, which, however, is not sufficient to test for a potential increase in efficiency. Therefore, the evaluation of the impact on the physical output of municipal services is needed. This is why we use a panel dataset with all Italian municipalities, covering four years, with details on expenditure and output related to six different local services provided by municipalities. The first novelty of our work is including the local service dimension in the analysis. This dimension is extremely important to properly evaluate the impact of inter-municipal cooperation, which, differently from amalgamation, usually covers only some specific services. In our analysis, we exploit the fact that municipalities choose to enter a municipal association at different years. Therefore, we evaluate the impact of intermunicipal cooperation on per-capita expenditure and output by using the within variation in each municipality and municipal service. The second novelty is the use of specific indexes of direct output for the provided services. We find that inter-municipal cooperation decreases per capita expenditure leaving output unchanged, thus generating an increase in efficiency. Interestingly, when we concentrate the analysis on small municipalities with less than 3,000 inhabitants, inter- municipal cooperation leads also to increase in output. We conclude that inter-municipal cooperation is extremely relevant in sorting out financial constraints of small municipalities when they need to provide services with high fixed costs. This result is particularly important in Italy where 56% of municipalities has less than 3,000 inhabitants. The effect is more pronounced as the number of associated municipalities increases and when there is at least one big municipality in the association.

JEL-codes: C23 H72 H73 (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.siepweb.it/siep/wp/wp-content/uploads/2 ... P_777_Rizzo_7-23.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ipu:wpaper:111

Access Statistics for this paper

More papers in Working papers from Società Italiana di Economia Pubblica Società Italiana di Economia Pubblica Corso Strada Nuova 65 27100 Pavia Italia.
Bibliographic data for series maintained by Monica Bozzano ().