Skip to main content
×
×
Home

Jurisdiction Size and Local Government Policy Expenditure: Assessing the Effect of Municipal Amalgamation

  • JENS BLOM-HANSEN (a1), KURT HOULBERG (a2), SØREN SERRITZLEW (a1) and DANIEL TREISMAN (a3)
Abstract

Across the developed world, the last 50 years have seen a dramatic wave of municipal mergers, often motivated by a quest for economies of scale. Re-examining the theoretical arguments invoked to justify these reforms, we find that, in fact, there is no compelling reason to expect them to yield net gains. Potential savings in, for example, administrative costs are likely to be offset by opposite effects for other domains. Past attempts at empirical assessment have been bedeviled by endogeneity—which municipalities amalgamate is typically nonrandom—creating a danger of bias. We exploit the particular characteristics of a recent Danish reform to provide more credible difference-in-differences estimates of the effect of mergers. The result turns out to be null: cost savings in some areas were offset by deterioration in others, while for most public services jurisdiction size did not matter at all. Given significant transition costs, the finding raises questions about the rationale behind a global movement that has already restructured local government on almost all continents.

Copyright
Corresponding author
Jens Blom-Hansen is Professor, Department of Political Science, Aarhus University, Bartholins Alle 7, 8000 Aarhus C, Denmark (jbh@ps.au.dk).
Kurt Houlberg is Director of Research, KORA, Danish Institute for Local and Regional Government Research, Købmagergade 22, 1150 Copenhagen K, Denmark (kuho@kora.dk).
Søren Serritzlew is Professor, Department of Political Science, Aarhus University, Bartholins Alle 7, 8000 Aarhus C, Denmark (soren@ps.au.dk).
Daniel Treisman is Professor, Department of Political Science, University of California, 4289 Bunche Hall, Los Angeles, CA 90095-1472, USA (treisman@polisci.ucla.edu).
References
Hide All
Alba Carlos, and Navarro Carmen. 2003. “Twenty-five Years of Democratic Local Government in Spain.” In Reforming Local Government in Europe, eds. Kersting Norbert and Vetter Angelika. Opladen: Leske & Budrich, 197221.
Alesina Alberto, and Spolaore Enrico. 2003. The Size of Nations. Cambridge, MA: MIT Press.
Allers Maarten A. 2012. “Yardstick Competition, Fiscal Disparities, and Equalization.” Economics Letters 117: 46.
Allers Maarten A., and Geertsema J. Bieuwe. 2014. “The Effects of Local Government Amalgamation on Public Spending and Service Levels. Evidence from 15 Years of Municipal Boundary Reform.” University of Groningen, unpublished paper (http://irs.ub.rug.nl/dbi/53ad249381b25).
Anderson Michelle Wilde. 2012. “Dissolving Cities.” Yale Law Journal 121: 1364–446.
Andrews Rhys, Boyne George A., Law Jennifer, and Walker Richard M.. 2005. “External Constraints on Local Service Standards: The Case of Comprehensive Performance Assessment in English Local Government.” Public Administration 83: 639–56.
Arter David. 2012. Scandinavian Politics Today. Manchester: Manchester University Press.
Baldersheim Harald, and Rose Lawrence E.. 2010a. “Territorial Choice: Rescaling Governance in European States.” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 120.
Baldersheim Harald, and Rose Lawrence E.. 2010b. “A Comparative Analysis of Territorial Choice in Europe – Conclusions.” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 234–60.
Baldersheim Harald, and Rose Lawrence E.. 2010c. “The Staying Power of the Norwegian Periphery.” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 80101.
Bergstrom Theodore C., and Goodman Robert P.. 1973. “Private Demands for Public Goods.” The American Economic Review 63 (3): 280–96.
Berry Christopher R. 2009. Imperfect Union. Representation and Taxation in Multilevel Governments. Cambridge, UK: Cambridge University Press.
Berry Christopher R., and West Martin R.. 2010. “Growing Pains: The School Consolidation Movement and Student Outcomes.” Journal of Law, Economics & Organization 26: 129.
Bhatti Yosef, and Hansen Kasper Møller. 2011. ”Who Marries Whom? The Influence of Societal Connectedness, Economic and Political Homogeneity, and Population Size on Jurisdictional Consolidations.” European Journal of Political Research 50 (2): 212–38.
Bish Robert L. 2001. Local Government Amalgamations. Discredited Nineteenth-Century Ideals Alive in the Twenty-First. C. D. Howe Institute Commentary No. 150. Toronto: C. D. Howe Institute.
Blom-Hansen Jens. 2003. “Is Private Delivery of Public Services Really Cheaper? Evidence from Public Road Maintenance in Denmark.” Public Choice 115: 419–38.
Blom-Hansen Jens. 2010. “Municipal Amalgamations and Common Pool Problems: The Danish Local Government Reform in 2007.” Scandinavian Political Studies 33: 5173.
Blom-Hansen Jens, and Heeager Anne. 2011. “Denmark: Between Local Democracy and Implementing Agency of the Welfare State.” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 221–41.
Blom-Hansen Jens, Houlberg Kurt, and Serritzlew Søren. 2014. “Size, Democracy, and the Economic Costs of Running the Political System.” American Journal of Political Science 58 (4): 790803.
Boadway Robin, and Shah Anwar. 2009. Fiscal Federalism. Cambridge, UK: Cambridge University Press.
Bodkin Ronald J., and Conklin David W.. 1971. “Scale and Other Determinants of Municipal Expenditures in Ontario: A Quantitative Analysis.” International Economic Review 12: 465–81.
Boedeltje Mijke, and Denters Bas. 2010. “Step-by-Step: Territorial Choice in the Netherlands.” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 118–38.
Borcherding Thomas E., and Deacon Robert T.. 1972. “The Demand for the Services of Non-Federal Governments.” The American Economic Review 62 (5): 891901.
Boston Jonathan, Martin John, Pallot June, and Walsh Pat. 1996. Public Management: The New Zealand Model. Auckland: Oxford University Press.
Boyne George A. 1995. “Population Size and Economies of Scale in Local Government.” Policy and Politics 23 (3): 213–22.
Boyne George A. 1996. Constraints, Choices and Public Policies. London: JAI Press.
Boyne George A. 1998. Public Choice Theory and Local Government. A Comparative Analysis of the UK and the USA. Houndsmills: MacMillan.
Boyne George A. 2002. “Concepts and Indicators of Local Authority Performance: An Evaluation of the Statutory Frameworks in England and Wales.” Public Money & Management 22: 2.
Boyne George A. 2003. “Sources of Public Service Improvement: A Critical Review and Research Agenda.” Journal of Public Administration Research and Theory 13: 367–94.
Brennan Geoffrey and Buchanan James B.. 1980. The Power to Tax. Analytical Foundations of a Fiscal Constitution. Cambridge, UK: Cambridge University Press.
Breunig Robert, and Rocaboy Yvon. 2008. “Per-capita Public Expenditures and Population Size: A Non-parametric Analysis using French Data,” Public Choice 136 (3-4): 429–45.
Brunazzo Marco. 2010. “Italian Regionalism: A Semi-Federation is Taking Shape – Or is it?” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 180–98.
Bundgaard Ulrik, and Vrangbæk Karsten. 2007. “Reform by Coincidence? Explaining the Policy Process of Structural Reform in Denmark.” Scandinavian Political Studies 30: 491520.
Byrnes Joel, and Dollery Brian. 2002. “Do Economies of Scale Exist in Australian Local Government? A Review of Research Evidence.” Urban Policy and Research 20: 391414.
Cheney Peter. 2014. “Reforming Local Government.” Eolas Magazine (http://www.eolasmagazine.ie/reforming-local-government/).
Christiansen Peter Munk, and Klitgaard Michael Baggesen. 2010. “Behind the Veil of Vagueness: Success and Failure in Institutional Reforms.” Journal of Public Policy 30: 183200.
Colino Cesar, and Del Pino Eloisa. 2011. “Spain: The Consolidation of Strong Regional Governments and the Limits of Local Decentralization.” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 356–84.
Cook Thomas D., and Campbell Donald T.. 1979. Quasi-Experimentation. Design & Analysis Issues for Field Settings. Boston: Houghton Mifflin.
Dafflon Bernard. 2013. “Voluntary Amalgamation of Local Governments: The Swiss Debate in the European Context.” In The Challenge of Local Government Size: Theoretical Perspectives, International Experience and Policy Reform, eds. Lago-Penas S. and Martinez-Vazquez J.. Northampton, MA: Edward Elgar Publishing, 189220.
Dahl Robert A., and Tufte Edward R.. 1973. Size and Democracy. Stanford: Standford University Press.
Denters Bas, Goldsmith Michael, Ladner Andreas, Mouritzen Poul Erik, and Rose Lawrence E.. 2014. Size and Local Democracy. Cheltenham: Edward Elgar.
Derksen Wim. 1988. “Municipal Amalgamation and the Doubtful Relation between Size and Performance.” Local Government Studies 14: 3147.
Dollery Brian, and Wallis Joe L. 2001. The Political Economy of Local Government. Cheltenham: Edward Elgar.
Dollery Brian, and Fleming Euan. 2006. “A Conceptual Note on Scale Economies, Size Economies and Scope Economies in Australian Local Government.” Urban Policy and Research 24 (2): 271–82.
Dollery Brian, Byrnes Joel, and Crase Lin. 2008. “Structural Reform in Australian Local Government.” Australian Journal of Political Science 43: 333–9.
Dunning Thad. 2012. Natural Experiments in the Social Sciences. A Design-Based Approach. Cambridge, UK: Cambridge University Press.
Fallend Franz. 2011. “Austria: From Consensus to Competition and Participation?” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 173–96.
Forde Catherine. 2005. “Participatory Democracy or Pseudo-Participation? Local Government Reform in Ireland.” Local Government Studies 31: 137–48.
Foster Kathryn A. 1997. The Political Economy of Special-Purpose Government. Washington, DC: Georgetown University Press.
Fox William F., and Gurley Tami. 2006. Will Consolidation Improve Sub-national Governments? World Bank Policy Research Working Paper 3913.
Grossman Guy, and Lewis Janet I.. 2014. “Administrative Unit Proliferation.” American Political Science Review 108 (1): 196217.
Hansen Sune Welling. 2014. “Common Pool Size and Project Size: an Empirical Test on Expenditures Using Danish Municipal Mergers.” Public Choice 159: 321.
Hinnerich Björn Tyrefors. 2009. “Do Merging Local Governments Free Ride on their Counterparts when Facing Boundary Reform?Journal of Public Economics 93: 721–8.
Hirsch Werner Z. 1959. “Expenditure Implications of Metropolitan Growth and Consolidation.” Review of Economics and Statistics 41 (3): 232–41.
Hlepas Nikolaos-Komnenos. 2003. “Local Government Reform in Greece.” In. Reforming Local Government in Europe, eds. Kersting Norbert and Vetter Angelika. Opladen: Leske & Budrich, 221–41.
Hlepas Nikos, and Getimis Panagiotis. 2011. “Greece: A Case of Fragmented Centralism and ‘Behind the Scenes’ Localism.” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 410–34.
Holzer Marc, Fry John, Charbonneau Etienne, Van Ryzin Gregg, Wang Tiankai, and Burnash Eileen. 2009. Literature Review and Analysis Related to Optimal Municipal Size and Efficiency. Report prepared for the Local Unit Alignment, Reorganization, and Consolidation Commission. http://www.nj.gov/dca/affiliates/luarcc/pdf/final_optimal_municipal_size_&_efficiency.pdf.
Hooghe Liesbet, and Marks Gary. 2009. “Does Efficiency Shape the Territorial Structure of Government?Annual Review of Political Science 12: 225–41.
John Peter. 2010. “Larger and Larger? The Endless Search for Efficiency in the UK.” In. Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 101–18.
Jonsson Ernst. 1983. “Measures Taken by Municipalities Undergoing Amalgamation.” Scandinavian Political Studies 6: 231–4.
Jordahl Henrik, and Liang Che-Yuan. 2010. “Merged Municipalities, Higher Debt: on Free-Riding and the Common Pool Problem in Politics.” Public Choice 143: 157–72.
Keating Michael. 1995. “Size, Efficiency and Democracy: Consolidation, Fragmentation and Public Choice.” In Theories of Urban Politics, eds. Judge David, Stoker Gerry, and Wolman Harold. London: Sage, 117–35.
Kerrouche Eric. 2010. “France and Its 36,000 Communes: An Impossible Reform?” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 160–80.
Kübler Daniel, and Ladner Andreas. 2003. “Local Government Reform in Switzerland. More For than By – But What about Of?” In Reforming Local Government in Europe, eds. Kersting Norbert and Vetter Angelika. Opladen: Leske & Budrich, 137–57.
Ladner Andreas. 2011. “Switzerland: Subsidiarity, Power-sharing, and Direct Democracy.” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 196221.
Lassen David Dreyer, and Serritzlew Søren. 2011. “Jurisdiction Size and Local Democracy: Evidence on Internal Political Efficacy from Large-scale Municipal Reform.” American Political Science Review 105 (2): 238–58.
Lidström Anders 2010. “The Swedish Model under Stress: The Waning of the Egalitarian, Unitary State?” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 6180.
Loughlin John. 2011. “Ireland: Halting Steps Towards Local Democracy.” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 4871.
Lowi Thodore J. 1972. “Four Systems of Policy, Politics, and Choice.” Public Administration Review 32 (4): 298310.
Martins M. R. 1995. “Size of Municipalities, Efficiency, and Citizen Participation: A Cross-European Perspective.” Environment and Planning C: Government and Policy 13 (4): 441–58.
Mouritzen Poul Erik, ed. 2006. Stort er Godt. Otte Fortællinger om Tilblivelsen af de nye Kommuner. Odense: Syddansk Universitetsforlag.
Mouritzen Poul Erik. 2010. “The Danish Revolution in Local Government: How and Why?” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 2141.
Newton Kenneth. 1982. “Is Small Really so Beautiful? Is Big Really so Ugly? Size, Effectiveness, and Democracy in Local Government.” Political Studies 30: 190206.
Oates Wallace E. 1972. Fiscal Federalism. New York: Harcourt Brace Jovanovich.
Oberfield Zachary W. 2014. “Accounting for Time: Comparing Temporal and Atemporal Analyses of the Business Case for Diversity Management.” Public Administration Review, 74: 777–89.
OECD. 2005. OECD Territorial Reviews: Busan, Korea 2005. Paris: OECD.
OECD. 2010. OECD Territorial Reviews: Sweden 2010. Paris: OECD.
OECD. 2014a. OECD Territorial Reviews: Netherlands 2014. Paris: OECD.
OECD. 2014b. OECD Regional Outlook 2014: Regions and Cities: Where Policies and People Meet. Paris: OECD.
Olson Mancur. 1986. “Towards a More General Theory of Governmental Structure.” American Economic Review 76 (2): 120–5.
Ostrom Elinor. 1972. “Metropolitan Reform: Propositions Derived from Two Traditions.” Social Science Quarterly 53 (3): 474–93.
O'Toole Larry J., and Meier Kenneth J.. 1999. “Modeling the Impact of Public Management: Implications of Structural Context.” Journal of Public Administration Research and Theory 9: 505–26.
Piattoni Simona, and Brunazzo Marco. 2011. “Italy: The Subnational Dimension to Strengthening Democracy since the 1990s.” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 331–56.
Pleschberger Werner. 2003. “Cities and Municipalities in the Austrian Political System since the 1990s. New Developments between ‘Efficiency’ and ‘Democracy’.” In Reforming Local Government in Europe, eds. Kersting Norbert and Vetter Angelika. Opladen: Leske & Budrich. 113–57.
Sancton A. 1996. “Reducing Costs by Consolidating Municipalities: New Brunswick, Nova Scotia and Ontario.” Canadian Public Administration, 39 (3): 267–89.
Sancton Andrew. 2000. Merger Mania. The Assault on Local Government. Montreal: McGill-Queen's University Press.
Sandberg Siv. 2010. “Finnish Power-Shift: The Defeat of the Periphery?” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 4261.
Santerre Rexford E. 2009. “Jurisdiction Size and Local Public Health Spending.” Health Services Research 44 (6): 2148–66.
Sawyer Malcolm C. 1991. The Economics of Industries and Firms: Theories, Evidence and Policy. London: Routledge.
Scherer F. M. and Ross David. 1990. Industrial Market Structure and Economic Performance. Boston: Houghton Mifflin.
Serritzlew Søren. 2005. “Breaking Budgets: An Empirical Examination of Danish Municipalities.” Financial Accountability & Management 21 (4), 413–35.
Slack Enid, and Bird Richard. 2013. “Merging Municipalities: Is Bigger Better?” IMFG Papers on Municipal Finance and Governance. Toronto: University of Toronto.
Solé-Ollé Albert, and Bosch Núria. 2005. “On the Relationship between Authority Size and the Costs of Providing Local Services: Lessons for the Design of Intergovernmental Transfers in Spain.” Public Finance Review 33 (3): 343–84.
Strang David. 1987. “The Administrative Transformation of American Education: School District Consolidation, 1938-1980.” Administrative Science Quarterly 32: 352–66.
Sverrisson Sigurdur, and Hannesson Magnús Karel. 2014. Local Governments in Iceland. Reykyavik: Association of Local Authorities in Iceland.
Swianiewicz Pawel. 2010. “If Territorial Fragmentation is a Problem, is Amalgamation a Solution? An East European Perspective.” Local Government Studies 36: 183203.
Tiebout Charles M. 1956. “A Pure Theory of Local Expenditure.” Journal of Political Economy 64: 416–24.
Treisman Daniel. 2007. The Architecture of Government. Rethinking Political Decentralization. Cambridge, UK: Cambridge University Press.
Tullock Gordon. 1969. “Federalism: Problems of Scale.” Public Choice 6 (1): 1929.
Velasco A. 2000. “Debts and Deficits with Fragmented Fiscal Policymaking.” Journal of Public Economics 76: 105–25.
Vetter Angelika, and Kersting Norbert. 2003. “Democracy versus Efficiency? Comparing Local Government Reforms across Europe.” In Reforming Local Government in Europe, eds. Kersting Norbert and Vetter Angelika. Opladen: Leske & Budrich, 1129.
Walker Richard M., and Andrews Ryes. 2015. “Local Government Management and Performance: A Review of Evidence.” Journal of Public Administration Research and Theory 25: 101–33.
Walter-Rogg Melanie 2010. “Multiple Choice: The Persistence of Territorial Pluralism in the German Federation.” In Territorial Choice. The Politics of Boundaries and Borders, eds. Baldersheim Harald and Rose Lawrence E.. Houndsmills: Palgrave, 138–60.
Wayenberg Ellen, De Rynck Filip, Steyvers Kristof, and Pilet Jean-Benoit. 2011. “Belgium: A Tale of Regional Divergence?” In The Oxford Handbook of Local and Regional Democracy in Europe, eds. Loughlin John, Hendriks Frank, and Lidström Anders. Oxford: Oxford University Press, 7196.
Williamson Oliver E. 1967. “Hierarchical Control and Optimum Firm Size.” Journal of Political Economy 75: 123–38.
Wollmann Hellmut. 2003. “German Local Government under the Double Impact of Democratic and Administrative Reforms.” In Reforming Local Government in Europe, eds. Kersting Norbert and Vetter Angelika. Opladen: Leske & Budrich, 85113.
Wooldridge Jeffrey M. 2009. Introductory Econometrics. A Modern Approach. Canada: South-Western Cengage Learning.
Zellner Arnold. 1962. “An Efficient Method of Estimating Seemingly Unrelated Regressions and Tests for Aggregation Bias.” Journal of the American Statistical Association 57 (298): 348–68.
Økonomi- og Indenrigsministeriet. 2012. Kommunale Udgiftsbehov og andre Udligningsspørgsmål. Betænkning nr. 1533, Økonomi- og Indenrigsministeriet marts.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

American Political Science Review
  • ISSN: 0003-0554
  • EISSN: 1537-5943
  • URL: /core/journals/american-political-science-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×
Type Description Title
WORD
Supplementary materials

Blom-Hansen supplementary material
Appendix Tables A1-A4

 Word (80 KB)
80 KB

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 47
Total number of PDF views: 738 *
Loading metrics...

Abstract views

Total abstract views: 2683 *
Loading metrics...

* Views captured on Cambridge Core between 11th November 2016 - 19th February 2018. This data will be updated every 24 hours.