Performance Rating and Yardstick Competition in Social Service Provision

Abstract

This paper investigates whether national evaluation of decentralised government performance tends, by lessening local information spill-overs, to reduce the scope for local performance comparisons and consequently to lower the extent of spatial auto-correlation among local government expenditures. It analyses UK local government expenditures on personal social services before and after the introduction of a national performance assessment system (SSPR, Social Services Performance Rating) that would attribute a rating to each local authority. The empirical evidence suggests that the introduction of the SSPR has substantially reduced policy mimicking among neighboring jurisdictions.

Keywords: social services, welfare competition, information spill-overs, spatial autocorrelation

JEL Classification: C21, H72, H77