Merging county administrations – cross-national evidence of fiscal and political effects

Blesse, Sebastian; Roesel, Felix Article — Published Version Merging county administrations – cross-national evidence of fiscal and political effects Local Government Studies Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Blesse, Sebastian; Roesel, Felix (2019) : Merging county administrations – cross-national evidence of fiscal and political effects, Local Government Studies, ISSN 1743-9388, Routledge, London, Vol. 45, Iss. 5, pp. 611-631, https://doi.org/10.1080/03003930.2018.1501363 This Version is available at: https://hdl.handle.net/10419/224980 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Merging county administrations –cross-national evidence of fiscal and political effects Sebastian Blesse a and Felix Roesel b a Centre for European Economic Research (ZEW), Mannheim, Germany; b Dresden Branch, Ifo Institute, Germany ABSTRACT While many central governments amalgamate municipalities, mergers of larger county administrations are rare and hardly explored. In this article, we assess both fiscal and political effects of county mergers in two different institutional settings: counties act autonomously as upper-level local governments (Germany), or counties being decentralised branches of the state government (Austria). We apply difference-in-differences estimations to county merger reforms in each country. In both cases, some counties were amalgamated while others remain untouched. Austrian counties (Bezirke) and German counties (Landkreise)widely differ in terms of autonomy and institutions, but our results are strikingly similar. In both cases, we neither find evidence for cost savings nor for staffreductions. Instead, voter turnout consistently decreases in merged counties, and right-wing populists seem to gain additional support. We conclude that political costs clearly outweigh fiscal null benefits of county merger reforms –independent of the underlying institutional setting. KEYWORDS County mergers; local government; expenditures; local elections; voter turnout Introduction ‘Is bigger better?’ 1 While evidence on the effects of municipal mergers becomes more and more settled, studies on mergers of larger county administrations are fairly rare. In this article, we assess both fiscal and political effects of county mergers in two different institutional settings. Many countries run multi-tier systems of local government. For example, counties serve as the upper-local level of local government below the state level in the US and in Ireland, Landkreise in Germany, or Bezirke in Austria. In this article, we define counties as local jurisdictions with some degree of self-autonomy around the average population of US counties (100,000) representing the second local government tier in countries with at least two subnational tiers. County-sized administrations provide public services and goods, which are more than local in nature but cover less than a federal state or country –education and social care are prominent examples. CONTACT Felix Roesel [email protected] Ifo Institute, Einsteinstrasse 3, Dresden, 01069, Germany LOCAL GOVERNMENT STUDIES 2019, VOL. 45, NO. 5, 611–631 https://doi.org/10.1080/03003930.2018.1501363 © 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http:// creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. Institutions and responsibilities of counties, however, differ widely across countries. In past decades, some OECD countries changed the number of countysized administrations through mergers and split-offs (see Table 1). We select 12 OECD countries which currently run county administrations. Sweden, Portugal and Norway marginally decreased the number of counties in the last six decades; Ireland and especially transitioning countries such as Hungary, Turkey or Estonia drastically increased the number of counties in the last decades. Luxembourg sticks to the number of counties as of 1950, the number of counties in the US also varies relatively little. Among OECD countries, Germany is an exceptional outlier and merged counties a great deal. German state governments expect that increases in county administrations deliver cost reductions through scale effects or economies of scope, and merged counties to a large extent. 2 Between 1950 and 2013, the number of counties virtually halves. Austria, on the contrary, increased the numbers of counties slightly in the 1950s, 1960s and 1980s but started merger reforms at the county level in recent years. 3 The number of districts changed both in countries with elected district representation (local councils and/or governors) as well as in countries where districts are run by appointed rather than elected governments (see Table 1). Because county mergers are rare, the exceptional case of Germany notwithstanding, very little is known whether enlarging county administrations actually pays off. Studies mainly focus on the municipal level. Almost all quasi-experimental studies which offer a causal interpretation do not show that mergers reduce total expenditures (Lüchinger and Stutzer 2002; Moisio and Uusitalo 2013; Allers und Geertsma 2016; Blesse and Baskaran 2016; Blom-Hansen et al. 2016; Fritz 2016; Studerus 2016; Harjunen, Saarimaa, and Tukiainen 2017; Sandsør, Falch, and Strøm 2017); Reingewertz (2012) being the sole exception. 4 Voter turnout in local elections, by contrast, seems to decrease (Fritz and Feld 2015; Koch and Rochat 2017; Lapointe, Saarimaa, and Tukiainen 2018). Studies also focus on city-county mergers which are a very specific form of county mergers (Blume and Blume 2007; Tang and Hewings 2017). Researchers, however, do not investigate mergers of countysized multi-purpose administrations yet. 5 The sole exception for studies on mergers of rural counties is Roesel (2017) who applied the synthetic control method to state-level aggregated data. The author does not show cost reductions. Instead, he finds that voter turnout in county council elections decreases and support for right-wing populists increases significantly. In this article, we investigate both fiscal and political effects of county mergers in different institutional settings. We apply difference-in-differences estimations to county merger reforms in Austria and Germany, which are comparable in terms of language, culture, and the style of administration. In both countries, some counties were amalgamated while others remain 612 S. BLESSE AND F. ROESEL Table 1. Number of county administrations in selected OECD countries. Germany Sweden Norway Luxembourg Austria Ireland Estonia Poland Hungary US Slovakia Turkey Elected council? a Yes Yes Yes No No Yes Yes Yes Yes Yes Yes No 1950 705 24 20 12 93 25 11 308 b 9 c 3,111 38 d 422 2013 402 21 19 12 95 28 15 314 24 3,143 79 919 Δ−303 −3−1 0 +2 +3 +4 +6 +15 +32 +38 +497 Notes: The table compares the number of county administrations (and equivalents) in selected countries in 1950 to 2013. Source: National statisticaloffices, Statoids.com, Swianiewicz and Łukomska (2017) for Poland. a) Information on election of district councils from Treisman (2008). b): This number refers to 1999 as Polish counties (powiats) were only established in 1999. c) This number refers to the year 1990 for Hungarian districts (megyek). d) This number refers to the year 1990 for Slovak districts (okresné). LOCAL GOVERNMENT STUDIES 613 untouched. Against the background of cultural similarities, the institutional background differs substantially between Austrian counties (Bezirke) and German counties (Landkreise). German counties act autonomously as upper-level local governments. Austrian counties, by contrast, are decentralised branches of the state government. Our results for the effects of county mergers on spending and electoral outcomes, however, are strikingly similar for both countries. Specifically, our empirical analysis compares merged counties to non-merged counties within the same German or Austrian federal state. In both cases, we neither find evidence for cost savings nor for staffreductions. Our findings are in line with theoretical considerations of Holzer et al. (2009) who suspect no scale effects in already large local governments. Mergers, by contrast, seem to bear some political costs. Voter turnout consistently decreases in merged Austrian and German counties, and right-wing populists seem to gain additional support. We conclude that political costs clearly outweigh the fiscal null benefits of county merger reforms –independent of the institutional background. Institutional background County mergers in Saxony-Anhalt (Germany) 2007 Government in Germany is shared among the federal level, the 16 federal states, and around 11,300 local governments. The structure and responsibilities of local governments differ widely across federal states. However, all German states run at least two layers of local government: Around 11,000 Gemeinden constitute the municipal level; 300 counties (Landkreise) are the upper-level local governments. Municipalities hold responsible for local services such as waste disposal, public safety and order and culture. German counties are mainly responsible for social care (youth and social welfare, accommodation costs of long-term unemployed), administrative services such as motor vehicle registration, economic development, public transport and parts of education. A directly elected county administrator (Landrat) is the head of the county administration 6 ; a county council (Kreistag) is the local parliament. German counties autonomously decide on upper-local affairs including the allocation of expenditures. Social and administrative expenditures account for around two-thirds of total expenditures of German counties. In 2013, German counties spent some 34 billion Euros (around 620 Euro per capita) which is about 25% of total local government expenditures. Total local government expenditure was around 14% of total public expenditure (federal level: 24%, state level: 23%, national insurance: 37%, EU: 2%). While German municipalities tax property and local business and receive parts of income and value added tax revenues, while counties, however, do not hold 614 S. BLESSE AND F. ROESEL own tax competences. Instead, counties levy contributions from the municipal level (Kreisumlage), receive transfers from the federal states or borrow. Both contributions from municipalities and state transfers mainly depend on local tax capacity. Around 100 urban counties (kreisfreie Städte) exercise both county functions and municipal functions as one; we exclude these large cities from the analysis because these cities differ substantially in terms of population and institutions. German federal states decide on the scope of local government including merger reforms. In this article we investigate a county merger reform in the East German state of Saxony-Anhalt. The main target of the reform was to amalgamate and concentrate county administrations in the new county capital in order to improve efficiency and to operate more economically. The reform induced comparably little conflict. Starting in 1999, the state government negotiated reform guidelines with counties officials including minimum and maximum sizes of newly formed counties. In 2004, counties agreed on the guidelines. Newly formed counties should at have a population between 150,000 and 300,000 by 2015 7 and the size of a county should not exceed 2,500 km 2 . Exceptions, however, were possible. Mergers should also consider regional cultural and economic linkages. Voluntary mergers were first priority. Many county councils proposed voluntary mergers; the state government basically followed all proposals. In May 2005, the state government announced a concrete reform act to merge counties by summer 2007. Finally, the state parliament approved the reform in late 2005. Three urban counties and two rural counties remain basically unchanged, while 19 other counties were restructured into nine new ones. 8 At least five newly created counties perfectly correspond with proposals for voluntary mergers; four others correspond to large extent. Average population of rural counties increases from around 90,000 to 170,000. Figure 1 maps the pre-reform and post-reform geography of Saxony-Anhalt. The reform in Saxony-Anhalt implemented the first county mergers since the early 1990s. In 2008 and 2011, the states of Saxony and Mecklenburg-West Pomerania followed. In both states, however, all counties were merged and counterfactuals within the states are not available. Moreover, responsibilities of counties differ across states and no other German state implemented county merger reforms in the last 20 years. We therefore limit our analysis to Saxony-Anhalt only. Until the present day, there was no evaluation of the county merger reform. Opinion polls from 2017 however show that only 30% of all citizens are pleased with the reform; 45% are somewhat or strongly dissatisfied. 9 Newspapers also report that costs increased after the reform. 10 However, it remains unclear whether increases can be attributed to the merger reform. We will address this issue in our analysis later on. LOCAL GOVERNMENT STUDIES 615 County mergers in Styria (Austria) 2012/2013 The institutional background of counties (Bezirke)inAustriadiffers to large extent from Germany. Austrian county administrations are decentralised branches of the state government rather than autonomous local authorities. Therefore, there are neither councils nor elections at the county level in Austria. The state government appoints the leader of the county administration (Bezirkshauptmann) and decides on the budget and the number of employees. Responsibilities of Austrian counties overlap with German counties to some extent, for example, when it comes to social care or issuing driver’s licences, but Austrian counties are more limited to pure administrative functions. Therefore, Germany (federal state of Saxony-Anhalt) Before mergers After mergers (2007) Austria (federal state of Styria) Before mergers After mergers (2012/2013) Mer g ed counties (treatment g rou p ) Unmer g ed counties (control g rou p ) Urban counties (excluded) Figure 1. County mergers. Notes: The maps show the shift in county borders in the German state of Saxony-Anhalt (Landkreise, upper panel) and in the Austrian state of Styria (Bezirke, lower panel) following merger reforms in 2007 and 2012/2013. White and blue shaded areas represent unmerged and merged counties; urban counties are colored in grey. 616 S. BLESSE AND F. ROESEL Austrian county administrations are by far smaller than German counties (around 1.4 vs 5.4 employees per 1,000 capita in our sample). By 2013, Austrian county administrations spend some 75 Euro per capita and year on average. The number and organisation of Austrian counties changed only very little in the past 60 years –compared to the German case. In 1950, Austria had 93 counties and increased the number to 99 in 2011. The very first merger reform of counties in Austria after WWII came into force in 2012/ 2013. 11 The state government of Styria merged 8 counties into 4 new ones while 8 other counties remain untouched, the urban county of Graz notwithstanding (see Figure 1). As in the German case of Saxony-Anhalt, the state government intended to cut costs, increase efficiency and provide economically sustainable administration. The reform process, however, sharply contrast with the German case. Because Austrian counties are part of the state government and there are no elected representatives at the county level, the state government decided on mergers ‘top down’in April 2012. Voluntary mergers were neither intended nor possible. By January 2013, the average county population size increase from 59,000 to 79,000. In 2016, the state government of Styria praised that merged counties reduced costs and administrative staff. 12 The government, however, does not compare figures in merged counties to the counterfactual situation, which is given by nonmerged counties. If unmerged counties also reduced staff, savings are a result of global trends rather than a result of the reform. In the next sections, we provide evidence that there would have been reductions even in the absence of the merger reform. Empirical strategy Data We collect annual data on expenditures in different categories, on the number of staffand on political economy outcomes (voter turnout, party vote shares) for all counties of the German state of Saxony-Anhalt for the period 1995 to 2016 from official publications. Data are not available for some years; column (5) in the descriptive statistics (Table 2)providesan overview. Fiscal data refer to expenditures per capita on staff, materials, rents, maintenance, interest payments and investments. We do not transfer data to constant prices because time fixed effects entirely cover changes in price levels and inflation rates were comparably low. We measure staffas the number of employees or the number full-time equivalents per capita. Finally, we use data of 1999, 2004, 2007/2009 and 2014 county council elections, and compute voter turnout and LOCAL GOVERNMENT STUDIES 617 vote shares for right-wing populist parties 13 and independent non-partisan lists and candidates. Data for Austrian counties are scarce because counties are formally part of the state government and do not run their own budget. However, we collect some 3-year averages of county administration staffbefore and after the merger reform from publications of the Court of Auditors and the state government accompanying the annual budget. 14 We also collect countylevel data on state election outcomes (voter turnout and right-wing populist 15 vote shares) before (2010) and after the merger reform (2015). We have to use state elections because Austrian counties do not have a county council, and the state government appoints the head of the administration. Table 2. Descriptive statistics. Obs. Mean Std. Dev. Min Max Covered period(1) (2) (3) (4) (5) Panel A: Germany (Saxony-Anhalt) Expenditures (Euro per capita) a Staff220 213.951 31.344 162.564 306.530 1995–2014 Materials 220 177.678 54.074 90.849 348.440 1995–2014 Rents 132 7.791 3.469 1.956 21.027 2003–2014 Maintenance 132 27.254 5.872 17.155 43.980 2003–2014 Interest payments 132 21.168 8.648 5.341 52.230 2003–2014 Investments 220 78.313 41.307 20.696 234.162 1995–2014 Staff(per 1,000 capita) Employees 153 5.369 0.675 4.277 7.723 2003–2016 Full time equivalents 153 4.852 0.624 3.852 7.186 2003–2016 Political economy (county council elections) Voter turnout 56 43.616 6.018 32.266 59.482 1999–2014 Vote share right-wing populists 56 2.045 2.130 0 8.424 1999–2014 Vote share non-partisans 56 8.658 5.073 0 20.629 1999–2014 Controls log Population 322 12.017 0.348 11.326 12.552 1995–2016 b Accrual accounting 322 0.264 0.441 0 1 1995–2016 Decentralised public employment service 322 0.211 0.409 0 1 1995–2016 Panel B: Austria (Styria) Staff(per 1,000 capita) Employees 24 1.402 0.282 0.988 1.951 2003, 2016 c Political economy (state elections) Voter turnout 26 69.860 3.633 60.727 75.969 2010, 2015 Vote share right-wing populists 26 21.376 8.789 10.968 35.120 2010, 2015 Controls log Population 26 11.314 0.495 10.252 12.522 2003, 2016 c Notes: The table show the descriptive statistics for the German state of Saxony-Anhalt (upper panel) and the Austrian state of Styria (lower panel). a) Expenditures in Euro per capita and current prices. a) Population 2016 proxied with population 2015. c) 2003: average over the years 2002, 2003, 2004; 2016: average over the years 2015, 2016, 2017. 618 S. BLESSE AND F. ROESEL consistently show that voter turnout decrease in constituency size because the probability to be the pivotal voter decrease (for surveys see Cancela and Geys 2016; Van Houwelingen 2017). Third, larger counties may crowd out non-partisan candidates that cannot rely on party organisations, which are required to keep in touch with local problems in unwieldy large jurisdictions (Fritz and Feld 2015). We investigate whether merger reforms come with adverse effects on political outcomes related to these three hypotheses: Voter turnout, vote shares for right-wing populists and vote shares for non-partisan candidates. Table 5 shows for the case of Saxony-Anhalt that voter turnout in county council election decrease by 4.3 percentage points in merged counties compared to unmerged counties.Thisisfullyinlinewithfindings by Fritz and Feld (2015), Koch and Rochat (2017), and (Lapointe, Saarimaa, and Tukiainen 2018) for municipal mergers in Germany, Switzerland, and Finland respectively. Vote shares for right-wing populists, by contrast, increase by around 1.8 percentage points, which is substantial given the mean right-wing populist vote share of 2.0%. Finally, we do not find an effect on non-partisan candidate vote shares contrasting former findings for the municipal level (Fritz and Feld 2015). Thus, county mergers do not affect lists of independent candidates. The results for Saxony-Anhalt entirely reproduce findings by Roesel (2017)for the neighbouring state of Saxony that also merged counties: Voter turnout decrease, right-wing populists’benefit and vote shares for independent non-partisan candidates are not affected. Therefore, even against the background that most mergers in Saxony-Anhalt were somewhat voluntary and accepted by local councils, voters seem to protest against larger jurisdictions. Koch and Rochat (2017) report similar effects on voter turnout for Swiss municipalities where also local referenda on municipal mergers were held. (Lapointe, Saarimaa, and Tukiainen 2018)elaborate on the Finish case. We conclude that based on our empirical findings also mergers on the county level may have adverse effects on local democracy. In the Austrian state of Styria, county administrations are formally part of the state government. Therefore, we examine changes in political outcomes of the state elections 2010 (before mergers) and 2015 (after mergers). The results fairly replicate our findings for Saxony-Anhalt regarding the negative effects on voter turnout. We interpret this finding as suggestive evidence for protest against the compulsory merger reform by the state government. However, the connection between state elections and county mergers is much looser in Austria. Thus, we do not confirm an effect on right-wing populist vote shares. There were also no independent non-partisan candidates in Austrian state elections. LOCAL GOVERNMENT STUDIES 625 Table 5. Political effects of merger reforms. Voter turnout Vote share right-wing populists Vote share non-partisans (1) (2) (3) Panel A: Germany (Saxony-Anhalt) –County elections (Treat × Post-Mergers) −4.342** 1.727*** 0.159 (1.446) (0.447) (1.696) log Population −15.308 −28.284* −72.158** (22.259) (14.550) (27.075) Period 1999–2014 1999–2014 1999–2014 Year fixed effects Yes Yes Yes County fixed effects Yes Yes Yes Counties 11 11 11 Obs. 44 44 44 Within R 2 0.807 0.504 0.532 Panel B: Austria (Styria) –State elections (Treat × Post-Mergers) −1.134** 0.552 – (0.408) (1.354) – log Population 1.798 2.109 – (2.545) (16.790) – Period 2010, 2015 2010, 2015 – Year fixed effects Yes Yes – County fixed effects Yes Yes – Counties 12 12 – Obs. 24 24 – Within R 2 0.923 0.984 – Notes: The table shows the results of difference-in-differences estimations comparing nine merged counties to two unmerged counties in Saxony-Anhalt (upper panel) and four merged counties to eight unmerged counties in Styria (lower panel). Voter turnout or vote shares are the dependent variables. (Treat × Post-Mergers) denotes the reform effect. In the case of Saxony-Anhalt, we use data of the 1999, 2004, 2007 (2009), and 2014 county council elections. In the case of Styria, we use data of the 2010 and the 2015 state elections. Significance levels (Robust standard errors in brackets): *** 0.01, ** 0.05, * 0.10. 626 S. BLESSE AND F. ROESEL Conclusion We have shown that county mergers do not pay offin terms of cost or staff reductions. Thereby, the institutional background does not matter: In Germany, counties act autonomously as upper-level local governments. In Austria, by contrast, counties are decentralised administrations of the state government. We do neither show that mergers lead to scale effects in the German case nor in the Austrian case. Instead, voter turnout decrease and right-wing populists seem to gain additional support. Thus, political costs clearly outweigh fiscal null benefits of county merger reforms –independent of the institutional setting considered here. However, our study has limitations, which further research may address. First, we stick to fiscal outcomes only but do not observe efficiency. If the same amount of money is spent for even more valuable projects, efficiency (output-input relations) increases even when costs remain constant. Our null effects in expenditures may mask these kinds of efficiency improvements. A valuable avenue would be to address this issue, for example, by investigating changes in DEA (data envelopment analysis) scores of local administrations before and after merger reforms. Second, we observe a rather low number of merged and unmerged counties. If researchers would like to investigate reforms where only one or few counties were merged (for example, Ireland, Israel or Norway), the synthetic control method offers a reasonable framework (see Abadie, Diamond, and Hainmueller 2015). Finally, we find robust and significant effects on political economy outcomes but can yet only hypothesise on the underlying channels. A highly valuable research question is why citizens abstain from voting in enlarged jurisdictions. Further research may address the mechanisms of adverse effects of merger reforms on local democracy in more detail. Moreover, future research should address related quasi-experimental effects of the implementation or abolishment of inter-municipal cooperation and hence the question, whether inter-municipal cooperation offers a valid alternative to size consolidation of local governments (Allers and Van Ommeren 2016). Notes 1. Bird and Slack (2013). 2. Internalization of spatial externalities (spill-over) might be another reason for merger reforms. Spill-over may cause an underprovision of publicly provided goods. Mergers may then lead to an increase in expenditures. Spill-over, however, do not play a major role in the discussion of merger reforms in Germany which were always intended to cut spending. 3. Austria increased the number of districts for two main reasons. First, after Nazi Germany annexed Austria in 1938, few districts were merged. In the 1950s, the Austrian government re-established those districts. Second, Austria experienced a LOCAL GOVERNMENT STUDIES 627 large increase in population after WWII from around 7 million inhabitants in 1950 to around 8.5 million today. Therefore, some districts were split –for example, in the booming West Austrian state of Vorarlberg (district of Dornbirn). 4. Blesse and Roesel (2017)provide a comprehensive overview on the literature on municipal merger reforms. There are also studies that do not use quasiexperimental methods such as difference-in-differences estimations (for example, Hanes 2015). We abstract from the results of these studies because they do not offer a causal interpretation. 5. Swianiewicz and Łukomska (2017) recently study splits of Polish counties and find that smaller counties lead to an increase in administrative costs but not in other budgetary category in the Polish case. There are also studies on mergers of special-purpose jurisdictions such as school districts (Brasington 1999; Duncombe and Yinger 2007; Knight and Gordon 2008). 6. With the exception of the state Schleswig-Holstein, county administrators are directly elected in all German states. 7. The draft of the reform act includes a full description of the merger process (see Entwurf eines Kommunalneugliederungsgesetzes (KngG), Drs. 4/2182). 8. In 2004/2005, the state government also merged municipalities. We abstract from this the merger reform which affected municipalities of all counties. 9. Volksstimme.de, Umfrage: Kreisgebietsreform stößt auf geteiltes Echo, https:// www.volksstimme.de/sachsenanhalt/umfrage-kreisgebietsreform-stoesst-aufgeteiltes-echo/1491928053000. In another German state, Mecklenburg-West Pomerania, poll data show that around 69% of all respondents opposed district mergers that were enacted in 2011. Also 69% of all respondents do not believe in cost savings and 72% do not believe that the local administration will get closer to the people. Thus, people anticipated fiscal null effects while politicians widely believed in cost savings. See Kommunal.de, Gebietsreformen bringen Unmut, https://kommunal.de/artikel/gebietsreformen-umfragen/. 10. Mitteldeutsche Zeitung online, Kreisreform im Jahr 2007 in Sachsen-Anhalt hat kein Geld gespart –Verwaltung sogar teurer, https://www.mz-web.de/sachsenanhalt/kreisreform-2007-umstrittene-fusionen-sparen-kein-geld—verwaltungsogar-teurer-25014952. 11. In 2015, the state government also merged municipalities. We abstract from this the merger reform which affected municipalities of all counties. See Roesel (2016). 12. See ORF.at, Bezirksfusionen bringen Millioneneinsparungen, http://steiermark. orf.at/news/stories/2816748/. 13. These are DVU, DSU, Republikaner, DP, NPD, Offensive D, and AfD. 14. See Landesrechnungshof Steiermark, Bezirkshauptmannschaften, LRH 10 B 3/2005–16. Amt der Steiermärkischen Landesregierung, Stellenplan 2017, A5 Personal. Staffin nursing homes and other social institutions included. 15. FPÖ, BZÖ, and Team Stronach. 16. German state officials did not carry out or commissioned a reform evaluation for decades. Instead, officials argue that responsibilities of counties changed; preand post-reform figures were therefore not comparable (see, for example, Mitteldeutsche Zeitung, 10 Jahre Gebietsreform: Rosenhochzeit im Saalekreis ohne Liebe?, https://www.mz-web.de/merseburg/10-jahre-gebietsreformrosenhochzeit-im-saalekreis-ohne-liebe–25137234). We account for changes in responsibilities because we compare merged to non-merged counties that both experienced the same changes in responsibilities. 628 S. BLESSE AND F. ROESEL Acknowledgments The authors wish to thank Editor Marc Esteve, the two anonymous referees and Niklas Potrafke for helpful comments. Disclosure statement No potential conflict of interest was reported by the authors. Funding This work was supported by the Deutsche Forschungsgemeinschaft [SFB 884 and grant number 400857762]. Notes on contributors Sebastian Blesse is a PhD student at the ZEW Mannheim and the University of Frankfurt. His research interests include fiscal federalism (e.g., administrative border reforms), empirical taxation, attitudes towards public policy and political economy. Felix Roesel is a post-doctoral researcher at the Dresden branch of the ifo Institute. His research activities focus on public economics, health economics and political economy. In particular, he is interested in the determinants of the global rise of rightwing populism. ORCID Felix Roesel http://orcid.org/0000-0003-3260-0572 References Abadie, A., A. Diamond, and J. Hainmueller. 2015.“Comparative Politics and the Synthetic Control Method.”American Journal of Political Science 59: 495–510. doi:10.1111/ajps.12116. Allers, M., and B. Geertsema. 2016.“The Effects of Local Government Amalgamation on Public Spending, Taxation, and Service Levels: Evidence from 15 Years of Municipal Consolidation.”Journal of Regional Science 56: 659–682. doi:10.1111/ jors.2016.56.issue-4. Allers, M., and B. 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