The impact of municipal territorial reforms on the economic performance of local governments. A systematic review of quasi-experimental studies

Recent years have brought a revival of territorial reforms at the local level (mainly amalgamations; however, some countries also experienced the splitting of local jurisdictions). An increasing interest in territorial reforms is manifested by a growing number of publications empirically assessing their outcomes. This paper provides a systematic review of 31 studies from 14 countries, which used quasi-experimental research designs to test the causal relationship between changes in jurisdiction size and various economic outcomes. The most clearly confirmed finding relates to savings in administrative spending, while the other public sectors are less prone to demonstrate economies of scale following amalgamation. The existing studies also provide strong evidence for the common pool effect in the period before amalgamation. In the other fields analysed, the studies yield substantial results, although they do not display a clear pattern. The article concludes with a discussion of the research gaps in the existing literature.