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Stronger together? Assessing the causal effect of inter-municipal cooperation on the efficiency of small Italian municipalities

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WORKING PAPER

Stronger together? Assessing the causal effect of inter-municipal cooperation on the efficiency of small Italian municipalities

AUTHORS

Davide Luca*, Felix Modrego†

Published: March 2019

ABSTRACT

When local governments are small and fragmented, promoting inter-municipal cooperation (IMC) among them has been increasingly seen as a tool to improve the management of public services by reaping economies of scale and scope. Yet, the empirical evidence on the impacts of IMC on local governments’ efficiency is scarce and inconclusive. In this paper we investigate the experience of Italy’s municipal unions (Unioni di comuni). We develop an index of technical efficiency by means of Robust Data Envelopment Analysis. We then exploit Fuzzy Regression Discontinuity Design and Nearest-Neighbour Matching estimators to explore whether Municipal unions have any impacts on the administrative efficiency of member municipalities. We do not find any significant effect.

Keywords: efficiency; inter-municipal cooperation; Data Envelopment Analysis; Regression Discontinuity Design; fiscal federalism; Italy.

JEL Classification: D73, D74, H70, H77, R51.

Declarations of interest: none.

* Corresponding author. Bennett Institute for Public Policy, Cambridge University, Cambridge, UK; Dept. of Social Sciences, GSSI School for Advanced Studies, L’Aquila, Italy; London School of Economics and Political Science, London, United Kingdom, dl622@cam.ac.uk.
† Department of Economics, Universidad Católica del Norte, Antofagasta, Chile; Dept. of Social Sciences, GSSI School for Advanced Studies, L’Aquila, Italy, felix.modrego@gssi.it.

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  • About the author

    Dr Davide Luca, Research Associate

    Davide is a Research Associate at the Bennett Institute for Public Policy. His research combines Geography, Political Economy, and Public Economics. It mainly focuses on the ways in which territorial governance and political institutions affect public service delivery and economic development at the local level.   Learn more

    Davide Luca