Efficiency assessment of Portuguese municipalities using a conditional nonparametric approach

José Manuel Cordero, Francisco Pedraja-Chaparro, Elsa C. Pisaflores and Cristina Polo

MPRA Paper from University Library of Munich, Germany

Abstract: Measuring local government efficiency is a complex task that has to take into account that they usually operate in a heterogeneous context. Therefore, the estimation of relative efficiency measures of their performance needs to account for the effect of contextual and exogenous variables on the production process. This should assure that the respective measures adequately reflect the portion of inefficiency that may be attributable to local authorities. In this paper, we apply time-dependent conditional frontier estimators to assess the performance of the 278 Portuguese mainland municipalities for the 2009-2014 period. By applying this nonparametric approach, we can avoid the strong assumptions on the specification of the estimated production function required by traditional two-stage methods. Furthermore, we examine the effect of contextual and exogenous variables on municipal efficiency levels and technological change. The results reveal that the recent local reforms introduced after the bailout agreement have slightly enhanced the performance of local authorities, but only for small and medium-sized municipalities.

Keywords: Efficiency; Local governments; Operational environment; Nonparametric estimation; Conditional approach (search for similar items in EconPapers)
JEL-codes: D24 H71 H83 (search for similar items in EconPapers)
Date: 2016-04-12
New Economics Papers: this item is included in nep-eff, nep-pke and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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