Explaining differences in efficiency. A meta-study on local government literature

Francesco Aiello (), Graziella Bonanno and Luigi Capristo

MPRA Paper from University Library of Munich, Germany

Abstract: This paper reviews the literature on local government efficiency by meta-reviewing 360 observations retrieved from 54 papers published from 1993 to 2016. The meta-regression is based on a random effect model estimated with the 2-step Random Effects Maximum Likelihood (REML) technique proposed by Gallet and Doucouliagos (2014). Results indicate that the study design matters when estimating a frontier in local government. We find that studies focusing on technical efficiency provide higher efficiency scores than works evaluating cost efficiency. The same applies when using panel data instead of cross-section data. Interestingly, studies that use the Free Disposal Hull (FDH) approach yield, on average, higher efficiency scores than papers employing the Data Envelopment Analysis (DEA) method, thereby suggesting that in this literature the convexity hypothesis of the production set is a matter. Finally, the efficiency of local government increases with the level of development of the analysed countries and is positively related to the national integrity of the legal system. The opposite holds when considering the corruption.

Keywords: municipalities; local government; meta-analysis; efficiency; frontier models; convexity; institution (search for similar items in EconPapers)
JEL-codes: C20 C82 C83 D24 H7 H70 L88 (search for similar items in EconPapers)
Date: 2018-06-10
New Economics Papers: this item is included in nep-eff and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: EXPLAINING DIFFERENCES IN EFFICIENCY: A META‐STUDY ON LOCAL GOVERNMENT LITERATURE (2019)
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