The effects of local government amalgamation on public spending and service levels

“We use difference-in-difference estimation to study how municipal amalgamation affects local government spending and public service levels in the Netherlands. Employing different models, different control groups and a number of robustness tests, we find no significant effect on aggregate spending.

We explore whether this finding is a result of amalgamation effects working in opposite directions for different types of municipalities, cancelling each other out. However, the amalgamation effect for small municipalities does not differ significantly from that for large ones, and the effect for municipalities with homogeneous preferences does not differ from that for jurisdictions with[out] heterogeneous preferences. We also investigate whether amalgamation leads to better public services instead of lower spending.

As it turns out, amalgamation reduces spending on administration, but there is no corresponding spending increase on public services. Finally, amalgamation does not raise house prices, which we would expect were it to improve public services.”

Published in The annual research report | M. Allers | 2014,,