Merging county administrations – cross-national evidence of fiscal and political effects

Abstract

While many central governments amalgamate municipalities, mergers of larger county administrations are rare and hardly explored. In this article, we assess both fiscal and political effects of county mergers in two different institutional settings: counties act autonomously as upper-level local governments (Germany), or counties being decentralised branches of the state government (Austria). We apply difference-indifferences estimations to county merger reforms in each country. In both cases, some counties were amalgamated while others remain untouched. Austrian counties (Bezirke) and German counties (Landkreise) widely differ in terms of autonomy and institutions, but our results are strikingly similar. In both cases, we neither find evidence for cost savings nor for staff reductions. Instead, voter turnout consistently decreases in merged counties, and right-wing populists seem to gain additional support. We conclude that political costs clearly outweigh fiscal null benefits of county merger reformsindependent of the underlying institutional setting.

The Fiscal Impact of County-to-Urban District Conversion in China

“…Empirical findings on the fiscal effects of city expansion in other countries are not conclusive either (Andrews and Boyne 2009;Aulich, Sansom and McKinlay 2014;Blesse and Roesel 2019;Drew, Kortt and Dollery 2013;Miljan and Spicer 2015;Moisio and Uusitalo 2013;Reingewertz 2012;Slack and Bird 2013;Studerus 2016). In China, CTUD conversion and other administrative boundary reforms have served as management instruments for urbanization and economic growth.…”

Municipal amalgamations and local housing prices

“…Looking specically at the impact on economies of scale and costs as well as economic eciency in this context, Tavares mentions several studies that have failed to nd a signicant lowering of expenditures as a result of municipal amalgamations in Denmark, Germany, Japan, and Canada (Blesse, Baskaran 2016, Blom-Hansen et al 2014, Cobban 2017, Miyazaki 2018. Even Blesse, Roesel (2018) fail to nd any evidence of cost saving or sta reductions in their studies of county amalgamations in Austria and Germany.…”

Special issue on municipal amalgamations: guest editors’ introduction

“…If economies of scale exhaust themselves once the municipality reaches a certain size, then amalgamation reforms would not be worthwhile for large municipalities. An article in this spirit is Blesse and Roesel (2019) in this special issue (see also Roesel 2017). They use a difference-in-differences framework to analyse county mergers in both Austria and Germany.…”

“…Finally, Blesse and Roesel (2019) examine voter turnout in the medium term after the 2007 county amalgamation reform in Germany. They find a 4.3 percentage points decrease in voter turnout in county elections after the merger.…”