An Empirical Analysis of Scale Economies in Administrative Intensity in the Paraná State Local Government System in Brazil

Abstract

A substantial empirical study has investigated scale economies in local government functions, most notably in local transportation, water, and wastewater provision. By contrast, relatively little effort has been directed at the empirical analysis of economies of scale in municipal administration, including in Brazilian local government, despite its significance for public policy on structural reform in local government. In order to address this gap in the literature, we investigate administrative scale economies in the Paraná state local government system in Brazil over the period 2006 to 2018. We find that there was a ‘U-shaped’ scale effect between council size by population and administrative intensity after controlling for a range of economic and social variables. Various public policy implications are considered.

Is Bigger More Efficient? An Empirical Analysis of Scale Economies in Administration in South Australian Local Government*

“…(2020), who found evidence for scale economies in administration in NSW local government, but only for urban councils. We identified a relationship which is curvilinear albeit negative over a vast majority of the council sizes present in SA, and we did not identify any optimal scale beyond which administrative intensity stops decreasing, which contrasts with a number of previous studies on different local government systems which found “U‐shaped” effects (Bikker & van der Linde, 2016; Bernardelli et al ., 2021).…”

“…Density was associated with an increase in administrative intensity, which was unexpected because Boyne and Meier (2013) predicted that large areas would be associated with increased administrative cost. Furthermore, we found that administrative intensity increased over time in rural councils between 2016 and 2019, in contrast to some other jurisdictions where a decrease over time has been identified (Boyne & Meier, 2013; Bernardelli et al ., 2021).…”

Economies of Scale and Sustainability in Local Government: A Complex Issue

“…One of the issues addressed in Section 4 and in a recent study of Niaounakis [8] concerns the large variety in economies of scale between the different municipality functions. An interesting example of substantial economies of scale is presented in this Special Issue by Bernadelli et al [39]. The authors analyzed economies of scale in municipal administration in the Paraná state local government system in Brazil over the period 2006 to 2018.…”