An Empirical Analysis of Scale Economies in Administrative Intensity in the Paraná State Local Government System in Brazil

Luan V Bernardelli,Michael A Kortt,Brian E Dollery

doi:10.3390/su13020591

Abstract

A substantial empirical study has investigated scale economies in local government functions, most notably in local transportation, water, and wastewater provision. By contrast, relatively little effort has been directed at the empirical analysis of economies of scale in municipal administration, including in Brazilian local government, despite its significance for public policy on structural reform in local government. In order to address this gap in the literature, we investigate administrative scale economies in the Paraná state local government system in Brazil over the period 2006 to 2018. We find that there was a ‘U-shaped’ scale effect between council size by population and administrative intensity after controlling for a range of economic and social variables. Various public policy implications are considered.

Highlights

Almost all local government systems comprise local authorities that vary significantly in terms of their environmental characteristics, such as population size, population density, geographic size, and topographical features
This paper has sought to address a gap in the empirical literature on Brazilian local government by investigating scale economies in administrative intensity in the Paraná state local government system
Drawing on a variety of data sources, we were able to contribute to the extant empirical literature by providing the first comprehensive analysis of municipal economies of scale in terms of administrative intensity for the 399 municipalities in the Paraná state local government system

Summary

Introduction

Almost all local government systems comprise local authorities that vary significantly in terms of their environmental characteristics, such as population size, population density, geographic size, and topographical features. A substantial empirical study has examined the operational efficiency of local government, including the impact of scale economies at both the system-wide level and in specific municipal functions and services, especially in urban transportation, water, and wastewater [1,2,3]. The magnitude of scale economies in local government is significant in various respects, including in terms of public policy aimed at improving municipal performance through structural reform by means of municipal mergers, shared service programs, and other policy instruments [4,5]. The degree of administrative intensity in any given public organization is affected by both its internal organizational characteristics [7,12,13,14]

Results

Discussion

Conclusion