Lockwood, Ben and Porcelli, Francesco (2011) Incentive schemes for local government : theory and evidence from comprehensive performance assessment in England. Working Paper. Coventry: University of Warwick. Dept. of Economics. (Warwick economics research paper series (TWERPS), Vol.2011).

Preview

PDF WRAP_Lockwood_twerp_960a.pdf - Other - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader Download (502Kb)

Abstract

This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a simple theoretical political agency model, we predict that CPA should increase service quality and local taxation, but have an ambiguous effect on the efficiency of service provision. We test these predictions using a difference in difference approach, using Welsh local authorities as a control group, exploiting the fact that local authorities in Wales were not subject to the same CPA regime. To do this, we construct original indices of service quality and efficiency, using Best Value Performance Indicators. We estimate that CPA increased the effective band D council tax rate in England relative to Wales by 4%, and increased our index of service quality output also by about 4%, but had no signifcant effect on our efficiency indices. There is evidence of heterogenous effects of CPA on efficiency, with some evidence that CPA impacted more on less efficient councils, and the "harder test" from 2005-8 having a much bigger effect.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	J Political Science > JS Local government Municipal government
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Local government -- Great Britain, Local taxation -- Great Britain
Series Name:	Warwick economics research paper series (TWERPS)
Publisher:	University of Warwick. Dept. of Economics
Place of Publication:	Coventry
Date:	2011
Volume:	Vol.2011
Number:	No.960
Status:	Not Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access
References:	Alesina, A., Tabellini, G., (2008), "Bureaucrats or politicians? Part II: Multiple policy tasks", Journal of Public Economics 92, 426-447. Ali, A., Seiford, L. M., (1993), "The mathematical programming approach to e¢ ciency analysis", in Fried, A. O. Lovell, A. K., Schmidt, S. S. (Eds), The measurement of Productive E¢ ciency, Oxford University Press, Ch. 3, 120-159. Andrews, R., (2004), "Analyzing deprivation and local authority performance: The implications for CPA", Public Money and Management, 24(1), 19-26. Andrews, R., Boyne, G. A., Law, J., and Walker, R. M., (2005), "External constraints on local service standards: the case of comprehensive performance assessment in English local government", Public Administration, 83(3), 639-656. Audit Commission, (2009)." Final score: The impact of cpa of local government, 2002-2008", www.audit-commission.gov.uk. Audit Commission, (2009b)."Scorecard explained", www.audit-commission.gov.uk. Bertrand, M., Duflo, E., Mullainathan, S., (2004), "How much should we trust differences- in-differences estimates?", The Quarterly Journal of Economics, 119(1), 249-275. Besley T. J., Coate S., (1997), "An Economic Model of Representative Democracy", The Quarterly Journal of Economics, 112(1), 85-114. Besley T. J., (2004), "Paying politicians: theory and evidence", Journal of the European Economic Association 2(2-3), 193-215. Besley T. J., (2006), Pricipled Agents? The Political Economy of Good Government, Oxford University Press. Besley, T. J., Bevan, G., Burchardi K.B., (2009), "Naming & Shaming: The impacts of dif- ferent regimes on hospital waiting times in England and Wales", CEPR Discussion Papers 7306. Boyne, G. A., James, O., John, P., and Petrovsky, N., (2009), "Political and managerial succession and the performance of English local governments", The Journal of Politics, 71, 1271-1284. Burgess, S., and Ratto, M., (2003), "The Role of Incentives in the Public Sector: Issues and Evidence", Oxford Review of Economic Policy, 19(2), 285-300. Burgess, S., Wilson, D., Worth, J., (2010), "A natural experiment in school accountability: the impact of school performance information on pupil progress and sorting", CMPO Working Paper Series, No. 10/246. CIPFA, (2008b), Finance and General Statistics 2007/08, The Chartered Institute of Public Finance and Accountancy. London. CIPFA, (2008c), Local Government Comparative Statistics 2008. The Chartered Institute of Public Finance and Accountancy. London. Charnes, A., Cooper, W. W., Rhodes, E., (1978), "Measuring the E¢ ciency of Decision- Making Units", European Journal of Operational Research, 2(6), 429-444. Debreu, G., (1951), "The coe¢ cient of resource utilization", Econometrica, 19(3), 273-292. Dixit, A., 1997. "AssociationPower of Incentives in Private versus Public Organizations", The American Economic Review. 87(2), 378-382. Dewatripont, M., Jewitt, I., Tirole, J, (1999), "The Economics of Career Concerns, Part I: Comparing Information Structures," Review of Economic Studies. 66(1), 183-198. Dewatripont, M., Jewitt, I., Tirole, J, (1999), "The Economics of Career Concerns, Part I: Comparing Information Structures," Review of Economic Studies. 66(1), 183-198. Farrell, M. J., (1957), "The measurement of productive e¢ ciency", Journal of the Royal Statistical Society, 120(3), 253-281. Gersbacha, H., Liessemb, V., (2008), "Incentive contracts and elections for politicians with multi-task problems", Journal of Economic Behavior & Organization, 68, 401-411. Gutierrez-Romero, R., Haubrich, D., and McLean, I., (2008), "The limits of performance assessments of public bodies: external constraints in English local government", Environment and Planning C: Government and Policy, 26, 767-787. Gutierrez-Romero, R., Haubrich, D., and McLean, I., (2010), "To what extent does depriva- tion a¤ect the performance of English local authorities?", International Review of Administrative Sciences, 76, 137-170. Haubrich, D. and McLean, I., (2006a), "Assessing public service performance in local au- thorities through cpa - a research note in deprivation", National Institute Economic Review, 197, 93-105. Haubrich, D. and McLean, I., (2006b), "Evaluating the performance of local government a comparison of the assessment regimes in England, Scotland and Wales", Policy Studies, 27(4), 271-293. Holmstrom, B., Milgrom, P., (1991), "Multitask Principal-Agent Analyses: Incentive Con- tracts, Asset Ownership, and Job Design", Journal of Law, Economics and Organization, 7(0), 24-52. Kneip, A., Park, B. U., and Simar, L., (1998), "A note on the convergence of nonparametric DEA estimators for production e¢ ciency scores", Econometric Theory, 14, 783-793. Martin, S., Downe, J., and Grace, C., (2010), "Validity, utilization and evidence-based pol- icy: The development and impact of performance improvement regimes in local public services", Evaluation, 16(31), 31-42. Maskin E., Tirole, J., (2004), "The Politician and the Judge: Accountability in Govern- ment", The American Economic Review, 94(4), 1034-1054. Mundlak, Y., (1978), "On the Pooling of Time-Series and Cross-Section Data" Economet- rica, 46, 68-86. Papke, L. E. and Wooldridge, J. M., (2008), "Panel data methods for fractional response variables with an application to test pass rates", Journal of Econometrics, 145, 121-133. Propper, C., Sutton, M., Whitnall, C., Windmeijer, F., (2008), "Incentives and Targets in Hospital Care: Evidence from a Natural Experiment" CMPO Working Paper Series, No. 08/205. Propper, C., Sutton, M., Whitnall, C., Windmeijer, F., (2008a), "Did 'targets and terror' Reduce English Waiting Times for Elective Hospital Care?", CMPO Working Paper Series No. 07/179. Revelli, F., (2008), "Performance competition in local media markets", Journal of Public Economics, 92, 1585-1594. Revelli, F., (2010), "Spend more, get more? An inquiry into English local government per- formance", Oxford Economic Papers, 62, 185-207. Rogo¤, K,., & Sibert, A., (1988), "Elections and Macroeconomic Policy Cycles" Review of Economic Studies, 55(1), 1-16. Simar, L. and Wilson, P. W., (1998), "Sensitivity analysis of e¢ ciency scores: How to boot- strap in nonparametric frontier models", Management Science, 44(1), 49-61. Simar, L. and Wilson, P. W., (2000), "A general methodology for bootstrapping in non- parametric frontier", Journal of Applied Econometrics, 27(6), 779-802. Simar, L. andWilson, P. W., (2007), "Estimation and inference in two-stage, semi-parametric models of production processes", Journal of Econometrics, 136, 31-64. Stewart, M. B., (2004), "The impact of the introduction of the uk minimum wage on the employment probabilities of low-wage workers", Journal of the European Economic Association, 2(1), 67-97.
URI:	http://wrap.warwick.ac.uk/id/eprint/41105

Request changes to a record

Actions (login required)

View Item