Sebastian Blesse

Do Municipal Mergers Reduce Costs? Evidence from a German Federal State

We study the fiscal consequences of municipal mergers by making use of a largescale merger reform in the German federal state of Brandenburg. This reform, which was implemented from 2001 to 2003, led to a substantial reduction in the number of municipalities. Individual mergers were heterogeneous across a number of dimensions, which allows us to contribute to the literature by exploring the consequences of different types of mergers within the same institutional setting. Focusing in particular on the distinction between compulsory and (semi-) voluntary mergers, we implement a difference-in-difference design with panel data from 1995-2010 at the level of post-merger municipalities. We find significant reductions in (administrative) expenditures after compulsory mergers. Voluntary mergers, on the other hand, have no effect on expenditures. We also show that the effects of voluntary and compulsory mergers vary according to further (secondary) characteristics of a merger.

Revenue Decentralization, Central Oversight and the Political Budget Cycle: Evidence from Israel

This paper examines whether revenue decentralization and direct external financial supervision affect the incidence and strength of political budget cycles, using a panel of Israeli municipalities during the period 1999–2009. We find that high dependence on central government transfers – as reflected in a low share of locally raised revenues in the municipalitys budget – exacerbates political budget cycles, while tight monitoring – exercised through central government appointment of external accountants to debt accumulating municipalities – eliminates them. We also find that this pattern is predominantly accounted for by development expenditures. These results suggest that political budget cycles can result from fiscal institutions that create soft budget constraints: that is, where incumbents and rational voters can expect that the costs of pre-election expansions will be partly covered later by the central government.

Was bringen kommunale Gebietsreformen?: Kausale Evidenz zu Hoffnungen, Risiken und alternativen Instrumenten

Zusammenfassung Seit Jahrzehnten werden kommunale Gebietskörperschaften fusioniert, in der Hoffnung auf Kosteneinsparungen und eine höhere Leistungsfähigkeit der Verwaltung. In diesem Beitrag geben Sebastian Blesse und Felix Rösel einen Überblick über die bestehende kausale Evidenz zu den Effekten von Gebietsreformen auf öffentliche Ausgaben, Effizienz und Qualität der Verwaltung sowie zu den möglichen politischen Folgen der Zusammenschlüsse. Sie zeigen, dass Evaluationsstudien selten Effizienzrenditen von Gebietsreformen nachweisen. Allerdings ergeben sich unbeabsichtigte Nebenwirkungen auf die politische Partizipation: Die Bürger sind weniger zufrieden mit der Demokratie und gehen seltener zur Wahl, und die Ungleichheit zwischen den Ortsteilen nimmt zu. Vor diesem Hintergrund erörtern die Autoren alternative Instrumente wie interkommunale Zusammenarbeit, Funktionalreformen und Maßnahmen der Verwaltungsmodernisierung.

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-in-differences 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 reforms – independent of the underlying institutional setting.

European Monetary Union reform preferences of French and German parliamentarians

We analyze data from an author�?conducted survey of members of the French and German parliaments on European Monetary Union reform preferences. We consider three potential drivers of preferences: nationality, ideology, and personal characteristics. For European Monetary Union policies like Eurobonds, the Fiscal Compact and the European Central Bank asset purchase program we find a robust difference between parliamentarians of both countries if they belong to the same party family and controlling for individual characteristics. Based on our estimates, however, we predict agreement between German left�?wingers and French conservatives even for ideological differences that are smaller than the current difference between the left and the right European party families. Our findings suggest that deeply�?rooted national differences do not impose a prohibitive obstacle to a German�?French parliamentary consensus on European Monetary Union policies.

Let's Stay in Touch - Evidence on the Role of Social Learning in Local Tax Interactions

This paper exploits detailed information on local political and socioeconomic networks and a reform of local fiscal equalization in North Rhine-Westphalia (NRW) to identify the role of learning in local tax rate interactions. Using this policy change in spatial lag IV regressions, we find that institutions like counties and jointly used administrations yield significant positive tax interactions whereas geographical neighbors do not react to each other. Common local media trigger tax policy interactions as well. Short-lived reform effects support our findings that social learning within certain networks intensifies tax rate interactions via coordination of local decision makers.