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Value for money? German local government efficiency in a comparative perspective

Kalb, Alexander; Geys, Benny; Heinemann, Friedrich
Journal article, Peer reviewed
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URI
http://hdl.handle.net/11250/93460
Date
2012
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Original version
http://dx.doi.org/10.1080/00036846.2010.502110
Abstract
In this paper, we investigate the cost efficiency of German local governments in the state of Baden-Württemberg in 2004 using a stochastic frontier approach. Besides being the first study on German data, we add two elements to the literature. First, we provide a comparative perspective, allowing us to embed our results in the broader literature. Second, unlike most previous studies, we explicitly account for exogenous or non-discretionary influences when estimating municipal efficiency scores. The results suggest that disregarding such exogenous factors can lead to significant and systematic bias in the estimated inefficiency levels. Particularly, underestimation of efficiency occurs for municipalities with high tourist activity, while the reverse is true for municipalities with high unemployment.
Description
This is the authors’ final, accepted and refereed manuscript to the article
Publisher
Taylor and Francis
Journal
Applied Economics

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