Assessing and Explaining the Relative Efficiency of Local Government: Evidence for Portuguese Municipalities

Antonio Afonso and Sónia Fernandes

No 2005/19, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: In this paper we measure the relative efficiency of Portuguese local municipalities in a non-parametric framework approach using Data Envelopment Analysis. As an output measure we compute a composite local government output indicator of municipal performance. This allows assessing the extent of municipal spending that seems to be “wasted” relative to the “best-practice” frontier. Our results suggest that most municipalities could achieve, on average, the same level of output using fewer resources, improving performance without necessarily increasing municipal spending. Inefficiency scores are afterwards explained by means of a Tobit analysis with a set of relevant explanatory variables playing the role of non-discretionary inputs..

Keywords: local government; expenditure efficiency; technical efficiency; DEA; Tobit models. (search for similar items in EconPapers)
JEL-codes: C14 C34 H72 R50 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-eff, nep-geo, nep-pbe and nep-ure
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp192005

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More papers in Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa Department of Economics, ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL.
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