Local Government Efficiency in German Municipalities

Effizienz öffentlicher Leistungserstellung in deutschen Kommunen

Abstract

This article evaluates German local governments’ cost efficiency using a sample of 1,021 municipalities in the state of Baden-Württemberg for the year 2001. We thereby concentrate on overall or ‘global’ efficiency scores—rather than estimate efficiency for one particular service—and explicitly account for exogenous or non-discretionary influences. The latter not only corrects for influences possibly beyond the control of local policy-makers, but also allows some indication of the determinants of such ‘global’ efficiency. Our results indicate that there is a substantial divergence in efficiency across municipalities despite a homogeneous institutional setting. As especially smaller municipalities appear less efficient, these results support a case for policy programmes aimed at boundary reviews or more extensive inter-communal cooperation among small municipalities.

Zusammenfassung

Dieser Beitrag evaluiert die Effizienz öffentlicher Leistungserstellung auf Basis der Datengrundlage von 1.021 Kommunen im Bundesland Baden-Württemberg im Jahr 2001. Dabei konzentrieren wir uns auf die Ermittlung von „globalen“ Effizienzindikatoren anstelle der Effizienzanalyse bestimmter öffentlicher Dienstleistungen und berücksichtigen explizit exogene Umfeldbedingungen. Letzteres berücksichtigt den Einfluss von Faktoren, die sich der Kontrolle der lokalen politischen Akteure entziehen und macht Einblicke in die Determinanten der „globalen“ Effizienz möglich. Unsere Ergebnisse deuten darauf hin, dass es trotz eines homogenen institutionellen Umfelds eine erhebliche Divergenz der Effizienz zwischen den Kommunen gibt. Weil besonders kleinere Kommunen als weniger effizient erscheinen, unterstützen diese Ergebnisse politische Bemühungen zur Überprüfung des räumlichen Zuschnitts von Gemeinden oder einen Ausbau der interkommunalen Kooperation unter den kleinen Kommunen.

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Fig. 1

Notes

  1. 1.

    We should note here that, contrary to the state or federal level, the formation of governing majorities within the local council is not institutionalized in the local law of Baden-Württemberg. Nonetheless, their existence is uncontested. These inter-party cooperations are used to facilitate and, to a certain extent, control the formation of opinions and decision-making.

  2. 2.

    A more detailed classification and description of these tasks is given in Gern (2005).

  3. 3.

    Although including these debt service costs does not affect the results in any significant manner; details available upon request.

  4. 4.

    Only the total number of state and private kindergarten places of the year 2002 was available. While it would be preferable to use only the number of state kindergarten places, the addition of private kindergartens may not be overly problematic. The reason is that these places also imply an ‘organizational’ burden for the local government.

  5. 5.

    ‘Free voter unions’ are loose federations of persons not belonging to specific political parties and exist only at the local level.

  6. 6.

    Still, even in the absence of (strong) opposition parties, there may still be substantial competition for political office when there is fierce competition within the majority party (or parties). While the causal nature of the relations between efficiency and the control variables is not at the heart of the present article, we should also note that efficiency may induce political concentration, rather than the other way around. We are grateful to an anonymous referee for pointing this out.

  7. 7.

    Building the best practice frontier based on the decision-making units at hand by definition implies that the ensuing efficiency measures are relative rather than absolute measures—and only have meaning within the specific sample employed. This clearly holds for all the procedures brought forward, and should be kept in mind in empirical applications.

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Acknowledgements

Friedrich Heinemann gratefully acknowledges the financial support of the “Förderkreis Wissenschaft und Praxis at the Centre for European Economic Research”. Benny Geys thanks the FWO-Vlaanderen (grant nr. G.0022.12) for financial support.

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Correspondence to Prof. Dr. Benny Geys.

Appendix

Appendix

Table 2 Results of the multi-output frontier estimation (N = 1,021)
Table 3 Summary statistics of the input, output and environmental variables for 1,021 municipalities of Baden-Württemberg in 2001. (Source: Statistisches Landesamt Baden-Württemberg (see http://www.statistik.baden-wuerttemberg.de; accessed 06.09.2012))

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Geys, B., Heinemann, F. & Kalb, A. Local Government Efficiency in German Municipalities. Raumforsch Raumordn 71, 283–293 (2013). https://doi.org/10.1007/s13147-012-0191-x

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Keywords

  • Local government performance
  • Stochastic frontier analysis
  • German municipalities

Schlüsselwörter

  • Öffentliche Leistungserstellung
  • Stochastic frontier analysis
  • Deutsche Kommunen