Inter-municipal cooperation in administrative tasks – the role of population dynamics and elections

Abstract

We analyze the factors driving the emergence of inter-municipal cooperation (IMC) in tasks of internal administration in West-Germany between 2001 and 2014. In line with the Institutional Collective Action Approach, we find similarities in political ideology to foster cooperation. Cost pressure drives IMC. Given substantial cost hysteresis in administrative tasks, we expect IMC to be more frequent among shrinking municipalities. Our results supports this notion. However, there is no evidence that municipalities make use of complementarities from divergent population dynamics. We apply a hazard model that allows us to analyze the timing of IMC arrangements. We find state subsidies for IMC are an important driving force behind IMC. IMC agreements are less likely to emerge in election years when municipalities face low cost pressure while the opposite is true for municipalities with high cost pressure.

Does Interlocal Competition Drive Cooperation in Local Economic Development Policies? Evidence on Interlocal Business Parks in Germany

“…Using the same survey among German municipalities, they both find IMC to be more likely among small municipalities. Bischoff and Wolfschütz (2019) also find population decline to be an important driver of IMC arrangements while IMC agreements are less frequent in election years. Wuschansky and König (2006) conducted a survey among German municipalities involved in interlocal business parks: The respondents state that interlocal business parks are most frequently motivated by the particular suitability of land situated at the municipal border.…”

“…Few studies have investigated the emergence of IMC in Germany. Bergholz (2018) focuses on IMC in tourism marketing while Bischoff and Wolfschütz (2019) analyze IMC in administrative services. Using the same survey among German municipalities, they both find IMC to be more likely among small municipalities.…”

“…This variable also serves as a proxy for the expected political transaction costs associated with IMC. The higher the number of neighbors with ideologically similar municipal councils, the lower the expected transaction costs (e.g., Bergholz 2018;Bischoff and Wolfschütz 2019). On average, slightly more than 40% of the neighboring municipalities qualify as similar in this respect.…”

“…To this end, we include the share of seats in municipality m's council held by "local initiatives" (mainly free voters associations) and by the Christian democrats (CDU). To control for possible timing effects of IMC agreements in the election cycle, we introduce a dummy variable for election years (e.g., Bischoff and Wolfschütz 2019). Some state governments support municipalities that engage in IMC through subsidies for new consortia granted upon application.…”

“…An adequate empirical method to analyze the emergence of such an incident is a hazard model (cf. Bergholz 2018;Bischoff and Wolfschütz 2019;Chen, Feiock, and Hsieh 2016). Municipalities that start cooperating in t are dropped from the analysis in t + 1.…”