Electoral Accountability and Local Government Efficiency: Quasi-Experimental Evidence from the Italian Health Care Sector Reforms

Abstract

This paper evaluates the effect of two policy changes on the efficiency of Italian regional governments in the provision of health care services: first a change in the electoral system; second a process of fiscal decentralization. The electoral system was changed in 1995 and replaced a pure proportional system by a majoritarian system, fostering the transition of regional governments towards a presidential regime. The process of fiscal decentralization took effect in 1998, when intergovernmental grants earmarked for the health care sector were replaced by regional taxes. The Italian context offers a unique source of data to test the predictions of recent theoretical models that support a positive relationship between government efficiency and the electoral accountability enhanced by institutions such as electoral rules and fiscal decentralization. The paper provides two main contributions: a comprehensive analysis of the two main reforms that involved Italian regional governments and the health care sector during the 1990s; the evaluation of the impact of the electoral reform in a quasi-experimental setting. The final results provide empirical evidence in line with the findings of the theoretical models.