Productivity change of Portuguese municipalities after local reforms

ABSTRACT

This article examines the impact of the reforms introduced in the structure of the Portuguese local administration after the bailout agreement in 2011 on the efficiency and productivity of municipalities. In order to determine a measure of productivity change, we apply the global Malmquist productivity index to assess the performance of the 278 Portuguese mainland municipalities for the recent 6-year period 2009–2014. The overall results reveal that there was a decrease in the global productivity until 2013 followed by a notable increase in 2014 basically due to technological changes, thus it seems that the reforms have had a positive effect on the productivity of municipalities.

KEYWORDS:

• Efficiency
• municipalities
• productivity
• local reforms
• Malmquist productivity index

JEL CLASSFICATION:

• H71
• H83
• D24

Acknowledgements

Juan Aparicio and Jesus T. Pastor would like to express their gratitude to the Spanish Ministry for Economy and Competitiveness for supporting this research through grant MTM2013-43903-P, and Jose M. Cordero also acknowledges the support from the same institution through grant ECO2014-53702-P.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ A civil parish is a subdivision of a municipality with its own elected bodies, possibly a neighbourhood or city district, a group of hamlets, a village, a town or an entire city, which has limited powers.

² Afonso and Fernandes (2008) provide similar arguments to support their decision to exclude the island municipalities from their analysis of Portuguese local governments.

³ The Portuguese local election of 2013 took place on 29 September, thus the new governments started to operate at the end of the year.

Additional information

Funding

This work was supported by the Ministerio de Economía y Competitividad under grants MTM2013-43903-P and ECO2014-53702-P.