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Does Local Government Fragmentation Cost Less?
Rebecca Hendrick
Benedict Jimenez
Kamna Lal
Department of Public Administration
University of Illinois at Chicago
2008
Under review at Urban Affairs Review
Does Local Government Fragmentation Cost Less?
ABSTRACT
Literature from various fields has vigorously debated the value and effects of fragmented and decentralized government systems versus consolidated and centralized systems. The different policy and theoretical arguments often target local governments in metropolitan regions. Some claim that fragmented and decentralized government structures are more efficient and accountable in these settings, while others argue that consolidated and centralized structures facilitate equity, are better able to solve region-wide issues, and are more efficient under some circumstances. The wealth of empirical research on this subject favors fragmentation and decentralization with respect to total local spending, but the results are mixed and the measures of these concepts vary greatly. This study documents and organizes the varied measures of fragmentation and decentralization, and applies this scheme to summarize the findings of 18 empirical studies that examine the effect of such structures on local government spending in the US. The study then uses these measures to examine the relationship between fragmentation / decentralization and total local government spending in the 41 largest (population) metropolitan regions in the US. The study finds strong support for the claim that the costs of local government are lower in fragmented and decentralized regions.
Public choice and federalism acknowledge three sets of related hypotheses or theorems concerning the size and efficiency of government systems. One set is predominated by the decentralization theorem (Oates, 1972, 1977) which states that public goods and services will be delivered more responsively and efficiently i
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