Amalgamation of Icelandic Municipalities, Average Cost, and Economic Crisis: Panel Data Analysis

Karlsson, Vífill

doi:10.5296/ijrd.v2i1.7531

Cited by 3 publications

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“…An Icelandic study (Karlsson & Jónsson 2011 indicated that, among all municipality affairs, overhead costs were most likely to be lowered following an amalgamation. A more recent study (Karlsson 2015) on Icelandic municipalities suggested a negligible change in operational costs following an amalgamation. The 2015 study differed from that of 2011-2012 in that the former was based on a data sample from the period 2004-2010 instead of one year, 2006, and panel data regression models were used instead of a cross-sectional, ordinary-least-squares (OLS) analysis.…”

Section: Literature Reviewmentioning

confidence: 96%

Do municipal amalgamations affect interregional migration?

Karlsson¹,

Eyþórsson²

2019

irpa

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This paper examines the change of interregional migration following municipal amalgamations. Interregional migrations are mostly triggered by differentials in household utilities, local economic conditions, amenities and the like. Thus, it is reasonable to believe that if an amalgamation of municipalities leads to a better service or lower local taxes in a community, it would attract new inhabitants and thus, increase the net-migration - as suggested by Tiebout (1956). A macro panel data set from Iceland was used that represents several essential variables of the housing market for 79 municipalities in Iceland during the period from 1993 to 2006. The results returned mixed effects on net migration. The amalgamations seem to have had both negative and positive effects on net-migration due to the differences in the number of municipalities in each merger and the similarities in the population sizes of the previous municipalities that joined each merger.

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Section: Literature Reviewmentioning

confidence: 96%

Do municipal amalgamations affect interregional migration?

Karlsson¹,

Eyþórsson²

2019

irpa

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“…In this case Iceland has the lowest cost of them all and is thus the most efficient country in the provision of administration. It should be noted that in Iceland administration cost fell by 9% in 2009 and 6% in 2010 due to necessary reforms and increased efficiency subsequent to the economic crash in 2008 (Karlsson, 2014). The labour market and business affairs for Greenland are comparable to economic affairs for Iceland and the Faroe Islands.…”

Section: Social Protectionmentioning

confidence: 99%

The Impact of Amalgamations on Services in Icelandic Municipalities

Eyþórsson¹,

Karlsson²

2018

Nordicum-Mediterraneum

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The objectives of reforming sub-levels of the public sector have historically been driven by the will and need to amalgamate municipalities. The reasons given for amalgamating have primarily been size-efficiency and capacity, as well as quality and quantity in services. This is shown, for example, in a recent study of selected European countries where these objectives are of high importance with regard to amalgamations in 11 European countries (Steiner et al., 2016). Baldersheim and Rose (2010) have described these objectives as “the consolidationist argument”. The basic argument is that, due to scale economies, increased size of political-administrative units will lower average costs (i.e., cost per capita) of providing municipal services and therefore increase the capacity to redistribute economic and organizational resources more effectively. What this means is that increased size yields lower average cost, which gives opportunities to provide services of more quality and quantity and distribute them more equally within all neighbourhoods and between neighbourhoods. Whether these objectives are realized after amalgamation in a new municipality is, however another question which has often been hard to answer in empirical studies. In the study of 11 European countries by Steiner et al. (2016) the most important outcomes of amalgamations tend to be improved service quality and to some extent cost savings. Case studies evaluating the impact of municipal amalgamations seem to be rare. However, Eythórsson and Jóhannesson (2002)[1] evaluated the impact of 7 different amalgamations out of a total of 37 municipalities in Iceland from the 1990’s. The evaluation covered various aspects such as democracy, administration, services, economic development and cost-efficiency. Among other things, their results indicated that services tended to improve and cost-efficiency tended to be realised, at least to some extent. Important aspects in this context were found to be equality between different parts of the municipality, as well as time from amalgamation. Even though, in general, quality and quantity in services increased after amalgamation, this did not seem to be the case for all parts or neighbourhoods of the municipality. People and local leaders in the more peripheral and less central parts were more discontent with the development of services in the new municipality. The time perspective seemed to matter, at least in some service fields. In the case of Iceland, there was some evidence that improvements in economic development and in infrastructure took time and that no positive signs could be detected until at least five years after the amalgamation. These almost 20 year old results indicate that the impact of municipal amalgamations often turns out to be more complex than general approaches may show. Therefore, we find it relevant to analyse newer material to try to determine whether this is the case with amalgamations a decade or decades later – in times when lessons could have been learned from previous cases in order to try to prevent inequality in service provision. This article attempts to answer the question what impact municipal amalgamations have had on municipal services, especially looking at service quality, service capacity, service efficiency and equality in services between the centre and the periphery in the municipality. The analysis is based on material from two separate research projects: firstly, from 2015, survey among elected local politicians in Iceland and, secondly, data from a survey conducted in 2013, where the respondents were citizens in eight amalgamated municipalities, which had been amalgamated in and around the middle of the first decade of the 21st century.

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“…In an Icelandic study, Karlsson (2015) where there is evidence that municipal amalgamations have achieved economies of scale.…”

Section: Studies Regarding the Impact Of Municipal Amalgamationsmentioning

confidence: 99%

“…A recent study suggested, however, that this has not been the case in Iceland (Karlsson, Eythórsson 2019). An older study, based on Icelandic data, detected relatively weak evidence for lower average operational cost of municipalities following amalgamations (Karlsson 2015). Nevertheless, another study concerning Iceland concluded that the amalgamations have led to an improved service level in the relevant municipalities at least in the most central urban community of a newly amalgamated municipality (Eythórsson, Karlsson 2018).…”

Section: Introductionmentioning

confidence: 99%

Municipal amalgamations and local housing prices

Karlsson

Eyþórsson

2022

REGION

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In this paper, we examine the relationship between housing prices and municipal amalgamations. Due to consumer preference for access over amenity value, there is a spatial disparity of housing prices, reflecting the value of land in specific locations. According to \citet{tiebout1956} local amenity values will increase if the services of a municipality improve without a comparable rise in taxes or service fees, or if taxes or service fees decrease while the service level remains the same. The bid-rent curve is a framework frequently used to capture a presence of goods or bads such as amenities, disamenities, and externalities. Accordingly, the present study will be used to detect a possible social benefit or loss following amalgamations of municipalities. Macro panel data from Iceland will be used, representing several essential variables of the house market for 79 municipalities in Iceland during the period from 1992 through 2006. The research shows a significant positive relationship, ceteris paribus, between regional municipal amalgamations and local real prices of apartments.

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Amalgamation of Icelandic Municipalities, Average Cost, and Economic Crisis: Panel Data Analysis

Cited by 3 publications

References 0 publications

Do municipal amalgamations affect interregional migration?

Do municipal amalgamations affect interregional migration?

The Impact of Amalgamations on Services in Icelandic Municipalities

Municipal amalgamations and local housing prices

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