Do Municipal Mergers Reduce Costs? Evidence from a German Federal State

Blesse, Sebastian; Baskaran, Thushyanthan

doi:10.2139/ssrn.2780966

Cited by 29 publications

(49 citation statements)

References 35 publications

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“…Like this article, Blesse and Baskaran () study the differential expenditure effects of voluntary and forced mergers, arguing that voluntary mergers are more likely to result in expenditure declines because both parties are invested in a successful merger. “Voluntary agreements should, in theory, be more efficient than compulsory ones as both partners must consider the merger as beneficial” (Blesse and Baskaran , 56). However, their empirical analysis suggests the opposite: that forced consolidations led to a decline in administrative spending, whereas voluntary mergers failed to produce cost savings.…”

Section: Theory and Literature Reviewmentioning

confidence: 97%

When Do Municipal Consolidations Reduce Government Expenditures? Evidence on the Role of Local Involvement

Mughan

2019

Public Administration Review

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Higher levels of government motivate municipal consolidations as a tool to increase efficiency in the local government sector, yet research shows that consolidations typically fail to deliver the promised spending reductions. Since mergers often require significant changes to institutional structures, one explanation is that local decision makers can substantially influence the outcomes of the consolidation process. To explore this possibility, this article contrasts "encouraged but voluntary" mergers with those that were "forced" on local governments in the state of New South Wales, Australia. Results show that voluntary mergers resulted in a 10 percent decline in total per capita expenditures, but forced consolidations failed to reduce spending across the board. The policy conclusion is that decision makers considering structural reform should invest in obtaining the support and participation of local government decision makers. Evidence for Practice• Local governments that opted in to consolidation were more likely to reduce expenditures than were governments where consolidation was imposed by a higher level of government. • Even when consolidation is voluntary, local officials appear to be hesitant to act to reduce expenditures in core sensitive areas such as employee costs. • Local involvement in the merger process is key to achieving cost savings. When considering consolidation, officials should consider how to involve local decision makers in the preparation and execution of the proposed merger.

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Section: Theory and Literature Reviewmentioning

confidence: 97%

When Do Municipal Consolidations Reduce Government Expenditures? Evidence on the Role of Local Involvement

Mughan

2019

Public Administration Review

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“…Nowadays, many countries and regions encourage voluntary mergers of municipalities (e.g. Saarimaa and Tukiainen 2014;Blesse and Baskaran 2016). However, mergers are just as far-reaching as non-voluntary amalgamations: Joint provision is not restricted to those public goods and services where economies of scale and scope are large.…”

Section: Introductionmentioning

confidence: 99%

Citizens’ support for inter-municipal cooperation: evidence from a survey in the German state of Hesse

Bergholz

Bischoff

2018

Applied Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. AbstractInter-municipal cooperation (IMC) is promoted as a way in which small, fiscally weak municipalities can cope with intensified interregional competition and demographic change. We provide first evidence on citizens' support for IMC using survey data from rural Germany. We cover different fields of public services and find the support for IMC to be lower for services where IMC implies intensified interaction with citizens from neighboring municipalities. The main research question asks whether citizens' support for IMC is larger in municipalities that can -by the logic of normative theory -expect higher net benefits from IMC. The answer is largely negative: While support for IMC decreases in the travel-time to neighboring municipalities, we do not find the support for IMC to be higher among citizens in small and/or fiscally weak municipalities, nor do we find the available of suitable partners to matter. At the same time, citizens' policy preferences strongly depends on individual-level factors. Believing that IMC reduces citizens' influence and control reduces the support for IMC substantially. Trust in local politicians and a high degree of emotional attachment to the home municipality reduce citizens' support for IMC. JEL: H77, D72

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“…Previous empirical literature on the effects of these policy experiments, however, displays very mixed results. While many verify the existence of scale economies in some amalgamations (Blesse and Baskaran, 2016;Blume and Blume, 2007;Reingewertz, 2012), others find the amalgamation effect to be insignificant and sometimes negative (Allers and Geertsema, 2016;Carr and Feiock, 1999;Moisio and Uusitalo, 2013;Nelson, 1992;Rouse and Putterill, 2005). Hinnerich (2009) even finds evidence that amalgamation gives rise to costs driven by opportunistic political behaviour (larger local debts) when a local government anticipates a future merger.…”

Section: Introductionmentioning

confidence: 99%

Do city–county mergers in China promote local economic development?

Wei

Hewings

2017

Econ Transit

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Municipal mergers have become a worldwide phenomenon in the past few decades, primarily advanced to exploit economies of scale. While most evaluations of municipal mergers have focused on the efficiency of local public goods provision, it is rare in the literature to explore how such mergers promote economic growth in a developing country context. This research investigates the economic consequences of a policy experiment of city-county mergers (che xian she qu) in China during the period 2000-2004. Using comprehensive datasets at city, county and firm levels, we present evidence that the merger significantly increases local economic development, and the magnitude of the effect depends on local endowments related to agglomeration forces. The results are robust to a number of different model specifications. We further verify that improved transport infrastructure and urban agglomeration economies after merger are potential contributors to the positive merger effects.JEL classifications: R1, R5, H11, O18.

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Do Municipal Mergers Reduce Costs? Evidence from a German Federal State

Cited by 29 publications

References 35 publications

When Do Municipal Consolidations Reduce Government Expenditures? Evidence on the Role of Local Involvement

When Do Municipal Consolidations Reduce Government Expenditures? Evidence on the Role of Local Involvement

Citizens’ support for inter-municipal cooperation: evidence from a survey in the German state of Hesse

Do city–county mergers in China promote local economic development?

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