Sune Welling Hansen

Common pool size and project size: an empirical test on expenditures using Danish municipal mergers

The paper examines the proposition from the law of 1 over n (Weingast et al. 1981) that project size tends to increase with common pool size. Comparable studies have tended, firstly, to focus on assets and debt rather than on expenditures and, secondly, on district population rather than on the number of districts as in the original formulation of the law. Both issues are sought to be remedied in this paper. The proposition is examined on Danish municipal expenditures from 1996 to 2006, using municipal mergers towards the end of this period as a quasi-experiment. A difference-in-difference identification strategy and a subsample strategy are used to identify the effect of the availability and size of a common pool on municipal expenditures. The paper finds positive, statistically and economically significant effects of the availability and size of a common pool in the final year of the treatment period. The importance of the number of districts over district population suggests a reappraisal of the law of 1 over n as originally formulated.

Do Municipal Mergers Improve Fiscal Outcomes

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.

The Democratic Costs of Size: How Increasing Size Affects Citizen Satisfaction with Local Government

The article examines the relationship between local government size and satisfaction with the input side and output side of local government. The literature on the relationship between size and satisfaction is extensive, but studies typically focus on structural differences rather than structural change, using traditional cross-sectional methods. The article seeks to remedy this by studying recent municipal mergers in Denmark as a quasi-experiment, using a unique data set consisting of a repeated and a cross-sectional survey of Danish citizens (combined with register data on the municipalities). The article finds that increases in population size have a negative, small to moderately sized effect on citizen satisfaction on both the input and the output side of local government. This implies that although local government consolidations are often motivated on economic grounds, they also have consequences for citizen satisfaction with local government.

Denmark: The First Years of Regional Voting after Comprehensive Reform

The Kingdom of Denmark, or equivalently the Danish Realm (Rigsfcellesskabet), consists of Denmark proper, the Faroe Islands and Greenland. The Faroe Islands have had home rule since 1948, and Greenland since 1979 (self-government since 2009), and therefore they have responsibility for internal affairs. Therefore, both must by any reasonable standard be considered independent states with distinct political systems, including electoral and party systems that differ from those of Denmark proper. We devote most attention to Denmark proper (henceforth referred to as Denmark) but also comment on the Faroe Islands and Greenland throughout this chapter.