Assessing the Performance of Local Government

Abstract

We consider the measurement of performance in the public sector in general, focussing on local government and the provision of library services by English local authorities in particular. We will consider two methodologies that assess the performance of local authorities in terms of the efficiency with which they provide services and consider methods that allow us to account for exogenous influences on performance, such as the socio-economic profile of the population served by the authority. We find that although both methods' results appear similar, the implications for potential cost savings vary widely. Omitting to account for background factors leads to an overstatement of the level of inefficiency and hence the scope for reducing expenditure.

Voter involvement, fiscal autonomy and public sector efficiency: Evidence from German municipalities

“…The former is accounted for through population density (measured as inhabitants per are) and the unemployment rate. While the former picks up the rural/urban divide (Stevens, 2005) and the heterogeneity of property prices (which might affect the cost situation of municipalities), unemployment implies higher spending on social benefits (a 'cost effect') as well as lower demand for high-cost or high-quality public services (a 'preference effect'). 13 The political constraints are captured through a Herfindahl index measuring political concentration in the local council (higher concentration of power is expected to reduce efficiency; see also 13 Additional factors can be conceived here -such as the geographical location or territorial characteristicsbut lack of data makes inclusion of such factors difficult.…”

Financial aid for local governments: blessing or mismanagement?

“…Obviously, a higher inefficiency of municipalities' having high debts is for the most part not due to interest payments. We skip the analysis of already tested background variables because these are primary included in the model to enable unbiased estimates of the inefficiency scores and allow to some extend for observed heterogeneity (for more information see Geys et al, 2010;Kalb, 2014;Stevens, 2005).…”

“…This approach is due to data availability. Kalb et al (2012) present a common standard of quite similar variables chosen as output proxies for municipalities (see, for example, de Borger and Kerstens, 1996;de Borger et al, 1994;Geys and Moesen, 2009;Kalb, 2014;Kalb et al, 2012;Stevens, 2005;Vanden Eeckhaut et al, 1993;Worthington, 2000).…”

“…On the other hand, the increase is assumed to accompany a higher spending on social needs resulting in an increase of the inefficiency (Geys et al, 2010). The population density relates to the urban/rural divide and thus proxies the ability of the authority to concentrate local public service provision (Stevens, 2005) and the heterogeneity of property prices (which might affect municipalities' cost situation). We further adopt accommodation facilities as a background variable tested by Kalb (2014) for the case of road maintenance cost efficiency.…”

Local Government Efficiency in German Municipalities

“…The socio-economic background variables include population density (inhabitants per are) and the number of unemployed in relation to total population. Population density proxies the rural/urban divide and is included under the argument that it can influence the ability of the authority to concentrate provision of the local public services (Stevens, 2005). Furthermore, it proxies the heterogeneity of property prices, which tend to differ substantially between rural and urban municipalities (and may thereby affect the cost situation of municipalities).…”