Abstract
Efforts undertaken by France to restructure the all ocation of governmental competencies increased the importance of subnational governments by transferri ng additional tasks. This paper analyzes the efficiency of public spending on an intermediate go vernment level for a sample of 96 departements in metropolitan France in 2008. Spending efficiency is measured using Data Envelopment Analysis (DEA). Results indicate significant room for improv ements and detect spending inefficiencies averaging between 10 and 22 percent, depending on model specification. To explain efficiency, a bootstrapped truncated regression, following Simar and Wilson (2007), is applied. The second-stage regression shows that efficiency is also determined by exogenous factors and identifies the distance t o the national capital, inhabitants’ income and the s hare of inhabitants of an age over 65 as significan t determinants of efficiency.
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