IDEAS home Printed from https://ideas.repec.org/p/ipu/wpaper/111.html
   My bibliography  Save this paper

Does inter-municipal cooperation increase efficiency? Evidence from Italy

Author

Listed:
  • Giuseppe Gori

    (Istituto Regionale di Programmazione Economica della Toscana - IRPET)

  • Patrizia Lattarulo

    (Istituto Regionale di Programmazione Economica della Toscana - IRPET)

  • Francesco Porcelli

    (Università degli Studi di Bari-Aldo Moro)

  • Leonzio Rizzo

    (Università degli Studi di Ferrara & IEB)

  • Riccardo Secomandi

    (Università degli Studi di Ferrara)

Abstract

Evidence on the impact of municipal amalgamation and cooperation is mixed and most of the existing literature is focused on the effect on the cost per capita, which, however, is not sufficient to test for a potential increase in efficiency. Therefore, the evaluation of the impact on the physical output of municipal services is needed. This is why we use a panel dataset with all Italian municipalities, covering four years, with details on expenditure and output related to six different local services provided by municipalities. The first novelty of our work is including the local service dimension in the analysis. This dimension is extremely important to properly evaluate the impact of inter-municipal cooperation, which, differently from amalgamation, usually covers only some specific services. In our analysis, we exploit the fact that municipalities choose to enter a municipal association at different years. Therefore, we evaluate the impact of intermunicipal cooperation on per-capita expenditure and output by using the within variation in each municipality and municipal service. The second novelty is the use of specific indexes of direct output for the provided services. We find that inter-municipal cooperation decreases per capita expenditure leaving output unchanged, thus generating an increase in efficiency. Interestingly, when we concentrate the analysis on small municipalities with less than 3,000 inhabitants, inter- municipal cooperation leads also to increase in output. We conclude that inter-municipal cooperation is extremely relevant in sorting out financial constraints of small municipalities when they need to provide services with high fixed costs. This result is particularly important in Italy where 56% of municipalities has less than 3,000 inhabitants. The effect is more pronounced as the number of associated municipalities increases and when there is at least one big municipality in the association.

Suggested Citation

  • Giuseppe Gori & Patrizia Lattarulo & Francesco Porcelli & Leonzio Rizzo & Riccardo Secomandi, 2023. "Does inter-municipal cooperation increase efficiency? Evidence from Italy," Working papers 111, Società Italiana di Economia Pubblica.
  • Handle: RePEc:ipu:wpaper:111
    as

    Download full text from publisher

    File URL: http://www.siepweb.it/siep/wp/wp-content/uploads/2023/07/SIEP-WP_777_Rizzo_7-23.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    2. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    3. Venturini, Fiorenza, 2020. "The unintended composition effect of the subnational government fiscal rules: The case of Italian municipalities," European Journal of Political Economy, Elsevier, vol. 63(C).
    4. Quentin Frère & Matthieu Leprince & Sonia Paty, 2014. "The Impact of Intermunicipal Cooperation on Local Public Spending," Urban Studies, Urban Studies Journal Limited, vol. 51(8), pages 1741-1760, June.
    5. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    6. Maarten A. Allers & J.A. de Greef, 2018. "Intermunicipal cooperation, public spending and service levels," Local Government Studies, Taylor & Francis Journals, vol. 44(1), pages 127-150, January.
    7. Massimiliano Ferraresi & Giuseppe Migali & Leonzio Rizzo, 2018. "Does intermunicipal cooperation promote efficiency gains? Evidence from Italian municipal unions," Journal of Regional Science, Wiley Blackwell, vol. 58(5), pages 1017-1044, November.
    8. Athey, Susan & Imbens, Guido W., 2022. "Design-based analysis in Difference-In-Differences settings with staggered adoption," Journal of Econometrics, Elsevier, vol. 226(1), pages 62-79.
    9. Blaeschke, Frédéric & Haug, Peter, 2014. "Does Intermunicipal Cooperation Increase Efficiency? Evidence from the Hessian Wastewater Sector," IWH Discussion Papers 11/2014, Halle Institute for Economic Research (IWH).
    10. Blesse, Sebastian & Baskaran, Thushyanthan, 2016. "Do municipal mergers reduce costs? Evidence from a German federal state," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 54-74.
    11. E. Dijkgraaf & R. H. J. M. Gradus, 2013. "Cost advantage cooperations larger than private waste collectors," Applied Economics Letters, Taylor & Francis Journals, vol. 20(7), pages 702-705, May.
    12. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    13. Maarten A. Allers & J. Bieuwe Geertsema, 2016. "The Effects Of Local Government Amalgamation On Public Spending, Taxation, And Service Levels: Evidence From 15 Years Of Municipal Consolidation," Journal of Regional Science, Wiley Blackwell, vol. 56(4), pages 659-682, September.
    14. Werner Heinz, 2007. "Inter-Municipal Cooperation in Germany: The Mismatch Between Existing Necessities and Suboptimal Solutions," Springer Books, in: Rudie Hulst & André van Montfort (ed.), Inter-Municipal Cooperation in Europe, chapter 0, pages 91-115, Springer.
    15. Revelli, Federico, 2003. "Reaction or interaction? Spatial process identification in multi-tiered government structures," Journal of Urban Economics, Elsevier, vol. 53(1), pages 29-53, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mehdi Guelmamen, 2024. "Does Intermunicipal Cooperation Affect Prices? An Economic Analysis of the French Drinking Water Sector," Working Papers AFED 24-10, Association Francaise d'Economie du Droit (AFED).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Notsu, Naruki, 2024. "Inter-municipal cooperation cloud and tax administrative costs," Regional Science and Urban Economics, Elsevier, vol. 105(C).
    2. Clémence Tricaud, 2019. "Better alone? Evidence on the costs of intermunicipal cooperation," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2019-12-ccr, Condorcet Center for political Economy.
    3. repec:hal:journl:hal-03380333 is not listed on IDEAS
    4. Marco Di Cataldo & Licia Ferranna & Margherita Gerolimetto & Stefano Magrini, 2023. "Splitting Up or Dancing Together? Local Institutional Structure and the Performance of Urban Areas," Economic Geography, Taylor & Francis Journals, vol. 99(1), pages 81-110, January.
    5. Pengju Zhang, 2023. "The fiscal and economic impacts of municipal dissolution: evidence from New York," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 948-1001, August.
    6. Kubo, Katsuyuki & Sasaki, Ryo, 2024. "The impact of a CSR committee on CSR performance," Japan and the World Economy, Elsevier, vol. 71(C).
    7. Mac Clay, Pablo & Börner, Jan & Sellare, Jorge, 2023. "Institutional and macroeconomic stability mediate the effect of auctions on renewable energy capacity," Energy Policy, Elsevier, vol. 180(C).
    8. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    9. Bhattacharjee, Arnab & Aravena, Claudia & Castillo, Natalia & Ehrlich, Marco & Taou, Nadia & Wagner, Thomas, 2022. "Agroforestry Programs in the Colombian Amazon: Selection, Treatment and Exposure Effects on Deforestation," National Institute of Economic and Social Research (NIESR) Discussion Papers 537, National Institute of Economic and Social Research.
    10. Kayaoglu, Aysegul, 2022. "Do refugees cause crime?," World Development, Elsevier, vol. 154(C).
    11. Cl'ement de Chaisemartin & Xavier D'Haultf{oe}uille, 2021. "Two-Way Fixed Effects and Differences-in-Differences with Heterogeneous Treatment Effects: A Survey," Papers 2112.04565, arXiv.org, revised Jun 2022.
    12. Isabelle Chort & Berk Öktem, 2024. "Agricultural shocks, coping policies and deforestation: Evidence from the coffee leaf rust epidemic in Mexico," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(3), pages 1020-1057, May.
    13. Jean-Victor Alipour & Valentin Lindlacher, 2022. "No Surprises, Please: Voting Costs and Electoral Turnout," CESifo Working Paper Series 9759, CESifo.
    14. Alexander Karaivanov & Dongwoo Kim & Shih En Lu & Hitoshi Shigeoka, 2022. "COVID-19 vaccination mandates and vaccine uptake," Nature Human Behaviour, Nature, vol. 6(12), pages 1615-1624, December.
    15. Sho Miyaji, 2024. "Instrumented Difference-in-Differences with Heterogeneous Treatment Effects," Papers 2405.12083, arXiv.org, revised Jan 2025.
    16. Romain Baeriswyl & Alex Oktay & Marc-Antoine Ramelet, 2023. "Exchange rate shocks and equity prices: the role of currency denomination," Working Papers 2023-05, Swiss National Bank.
    17. Marcus Roller, Daniel Steinberg, 2023. "Differences-in-Differences with multiple Treatments under Control," Diskussionsschriften credresearchpaper41, Universitaet Bern, Departement Volkswirtschaft - CRED.
    18. Natali, Ilaria, 2024. "Economic Opportunity and Opioid Regulation: the Case of Codeine in France," TSE Working Papers 24-1563, Toulouse School of Economics (TSE).
    19. Castelnovo, Paolo & Clò, Stefano & Florio, Massimo, 2023. "A quasi-experimental design to assess the innovative impact of public procurement: An application to the Italian space industry," Technovation, Elsevier, vol. 121(C).
    20. OKUDAIRA Hiroko & TAKIZAWA Miho & YAMANOUCHI Kenta, 2022. "Does Employee Downsizing Work? Evidence from Product Innovation at Manufacturing Plants," Discussion papers 22015, Research Institute of Economy, Trade and Industry (RIETI).
    21. Luca Coraggio & Marco Pagano & Annalisa Scognamiglio & Joacim Tåg, 2022. "JAQ of All Trades: Job Mismatch, Firm Productivity and Managerial Quality," EIEF Working Papers Series 2205, Einaudi Institute for Economics and Finance (EIEF), revised Mar 2022.

    More about this item

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipu:wpaper:111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Monica Bozzano (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.