Merging County Administrations – Cross-National Evidence of Fiscal and Political Effects

29 Pages Posted: 25 Jul 2018 Last revised: 9 Jan 2019

See all articles by Sebastian Blesse

Sebastian Blesse

ZEW – Leibniz Centre for European Economic Research

Felix Roesel

CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 2, 2018

Abstract

While many central governments amalgamate municipalities, mergers of larger county administrations are rare and hardly explored. In this paper, we assess both fiscal and political effects of county mergers in two different institutional settings: counties act autonomously as upperlevel local governments (Germany), or counties being decentralised branches of the state government (Austria). We apply difference-in-differences estimations to county merger reforms in each country. In both cases, some counties were amalgamated while others remain untouched. Austrian counties (Bezirke) and German counties (Landkreise) widely differ in terms of autonomy and institutions, but our results are strikingly similar. In both cases, we neither find evidence for cost savings nor for staff reductions. Instead, voter turnout consistently decreases in merged counties, and right-wing populists seem to gain additional support. We conclude that political costs clearly outweigh fiscal null benefits of county merger reforms – independent of the underlying institutional setting.

Keywords: County Mergers; Local Government; Expenditures; Local Elections; Voter Turnout

Suggested Citation

Blesse, Sebastian and Roesel, Felix, Merging County Administrations – Cross-National Evidence of Fiscal and Political Effects (July 2, 2018). Local Government Studies, Forthcoming ; ZEW - Centre for European Economic Research Discussion Paper No. 18-031. Available at SSRN: https://ssrn.com/abstract=3208100 or http://dx.doi.org/10.2139/ssrn.3208100

Sebastian Blesse

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Felix Roesel (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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