Electoral Accountability and Local Government Efficiency: Quasi-Experimental Evidence from the Italian Health Care Sector Reforms

Abstract:     
This paper evaluates the effect of two policy changes on the efficiency of Italian regional governments in the provision of health care services: first a change in the electoral system; second a process of fiscal decentralization. The electoral system was changed in 1995 and replaced a pure proportional system by a majoritarian system, fostering the transition of regional governments towards a presidential regime. The process of fiscal decentralization took effect in 1998, when intergovernmental grants earmarked for the health care sector were replaced by regional taxes. The Italian context offers a unique source of data to test the predictions of recent theoretical models that support a positive relationship between government efficiency and the electoral accountability enhanced by institutions such as electoral rules and fiscal decentralization. The paper provides two main contributions: a comprehensive analysis of the two main reforms that involved Italian regional governments and the health care sector during the 1990s; the evaluation of the impact of the electoral reform in a quasi-experimental setting. The final results provide empirical evidence in line with the findings of the theoretical models.

Number of Pages in PDF File: 35

Keywords: electoral accountability, DEA, decentralisation, efficiency, health, IRAP, Italy, panel data, stochastic frontier

JEL Classification: D71, D91, I32

working papers series