TY - JOUR
T1 - Do municipal mergers improve fiscal outcomes?
AU - Hansen, Sune Welling
AU - Houlberg, Kurt
AU - Pedersen, Lene Holm
PY - 2014/1/1
Y1 - 2014/1/1
N2 - Improved fiscal management is a frequent justification for promoting boundary consolidations. However, whether or not this is actually the case is rarely placed under rigorous empirical scrutiny. Hence, this article investigates if fiscal outcomes are improved when municipalities are merged. The basic argument is that the conceptualisation of fiscal management in political science is often too narrow as it focuses on the budget and pays hardly any attention to balances in the final accounts and debts - elements of management which are central to policy making. On this background, the causal relationship between municipal mergers and fiscal outcomes is analysed. Measured on the balance between revenues and expenses, liquid assets and debts, municipal mergers improve the fiscal outcomes of the municipalities in a five-year perspective, although the pre-reform effects tend to be negative. For liquidity and debt, however, the improvement only entails re-establishing the levels prior to the reform. The testing ground is the recent mergers of Danish municipalities, which, it is argued, constitute a quasi-experiment. This forms the basis of a Difference-in-Difference design, allowing the alleviation of endogeneity problems and enabling causal inference. The analysis is based on administrative data from the Danish municipalities in the period 2003-11.
AB - Improved fiscal management is a frequent justification for promoting boundary consolidations. However, whether or not this is actually the case is rarely placed under rigorous empirical scrutiny. Hence, this article investigates if fiscal outcomes are improved when municipalities are merged. The basic argument is that the conceptualisation of fiscal management in political science is often too narrow as it focuses on the budget and pays hardly any attention to balances in the final accounts and debts - elements of management which are central to policy making. On this background, the causal relationship between municipal mergers and fiscal outcomes is analysed. Measured on the balance between revenues and expenses, liquid assets and debts, municipal mergers improve the fiscal outcomes of the municipalities in a five-year perspective, although the pre-reform effects tend to be negative. For liquidity and debt, however, the improvement only entails re-establishing the levels prior to the reform. The testing ground is the recent mergers of Danish municipalities, which, it is argued, constitute a quasi-experiment. This forms the basis of a Difference-in-Difference design, allowing the alleviation of endogeneity problems and enabling causal inference. The analysis is based on administrative data from the Danish municipalities in the period 2003-11.
UR - http://www.scopus.com/inward/record.url?scp=84899989017&partnerID=8YFLogxK
U2 - 10.1111/1467-9477.12020
DO - 10.1111/1467-9477.12020
M3 - Journal article
AN - SCOPUS:84899989017
SN - 0080-6757
VL - 37
SP - 196
EP - 214
JO - Scandinavian Political Studies
JF - Scandinavian Political Studies
IS - 2
ER -