Is Small Beautiful? The Quasi-experimental Analysis of the Impact of Territorial Fragmentation on Costs in Polish Local Governments

Debates on the impact of size of subnational jurisdiction on the costs of public-service delivery have a very long tradition, but results are still far from conclusive. This article applies a quasi-experimental scheme of the synthetic control method for Polish municipal fragmentation to analyze the impact of territorial reform on administrative spending as well as on the operating surplus of the budget. Earlier studies using similar methods focused on amalgamation reforms, so the study of territorial fragmentation is an important new contribution to knowledge on scale effects. The analysis clearly confirms the existence of economy of scale in administrative services. The result for the operating surplus is less clear and more ambiguous. Results of the study are to a large extent a mirror of earlier analysis of territorial amalgamation consequences, which confirms the importance of scale for administrative costs, but not necessarily for costs of other local services.