Abstract
This paper aims to test the existence of vertical interactions in terms of public spending between overlapping local jurisdictions in France using a data set of 110 French municipalities and their corresponding departments in 2001 and 2005. To do so, we consider that demand for municipal services is conditioned by the services provided by departments. We then estimate two specifications which allow spatial heterogeneity to be modeled thanks to models with spatial regimes and which are compared with a simple spatial error specification (without spatial heterogeneity). The two estimated spatial regimes models are able to eliminate spatial autocorrelation in the error term. The estimation results show that an appropriate consideration of spatial heterogeneity can lead to new insights. The spatial error specification without regimes reveals a robust complementary demand relationship between services provided by departmental and municipal governments. However, the results provided by the spatial regime models are different. They give evidence of heterogeneity in the nature of vertical spending interactions with independence, complementarity, or substitution between the services offered by the two overlapping jurisdictions.
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Notes
- 1.
Turnbull and Djoundourian (1993) do not confirm the complementary effect for individual service categories.
- 2.
Major administrative reforms in France in 2014 and 2015 reduced the number of metropolitan regions to 13, and the number of intercommunal groupings to 2133 in 2015, and to 1258 in 2019.
- 3.
These tests are implemented with Stata10. See Baum and Schaffer (2003) for more details.
- 4.
Spatial data analysis is conducted with SpaceStat.
- 5.
A finer spatial division, into the 22 French administrative regions, is not possible as the numbers of municipalities and departments in each region would be too small to allow an econometric analysis.
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Binet, ME., Guengant, A., Leprince, M. (2020). Overlapping Jurisdictions and Demand for Local Public Services: Does Spatial Heterogeneity Matter?. In: Thill, JC. (eds) Innovations in Urban and Regional Systems. Springer, Cham. https://doi.org/10.1007/978-3-030-43694-0_14
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