Abstract
AbstractLocal government mergers are an important policy issue in many countries, yet empirical evidence of the effects of merging and of local government size on the production and quality of local public services is scarce. We use the spatial and temporal variation in forced mergers between cities and their surrounding local governments in Norway to provide quasi‐experimental evidence of the effect on long‐run student outcomes. We find that the mergers increase students’ educational attainment by about 0.1 years and income by about 4%, suggesting that mergers improve long‐run student outcomes through increased school productivity.
Highlights
Reforms to consolidate local governments are contentious issues in many countries, and such reforms are currently on the political agenda in countries like Norway and Finland.1 Yet the effect of such reforms on the production and quality of local public services is uncertain
In this paper we investigate whether increasing local government size has a positive effect on students’ long-term outcomes through increasing the quality of an essential public service provided by local governments; compulsory schooling
We find that the mergers significantly increase student income in adulthood by around 4%, while the effect on educational attainment measured by years of education is generally positive and around 0.1
Summary
Reforms to consolidate local governments are contentious issues in many countries, and such reforms are currently on the political agenda in countries like Norway and Finland. Yet the effect of such reforms on the production and quality of local public services is uncertain. In the 1980s and 1990s, the Norwegian central government enforced mergers between cities and their surrounding local governments, resulting in increased local government size while schools and catchment areas remained unchanged. We exploit these mergers to estimate the effect on student income and educational attainment, using a difference-indifferences approach with school fixed effects. The finding is consistent with the hypothesis that students enrolled in schools in former surrounding local governments took advantage of potential gains in existing administrative quality in the former cities, further research is needed to confirm this interpretation.
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