Amalgamation Impacts on Local Public Expenditures in Sweden

This paper concerns amalgamation impacts on local public expenditures. The empirical analysis is based on the extensive 1952 municipal reform in Sweden. The 1952 reform amalgamated municipalities in a way that they had at least 2,000–3,500 inhabitants. This was done in the belief that larger municipalities would improve administration efficiency and public services by exploiting economies of scale. The results show that the reform had a negative impact on expenditures as long as the municipalities did not exceed a critical size.