Effects of fiscal decentralisation and electoral accountability on government efficiency evidence from the Italian health care sector

Abstract

Data envelopment analysis and panel data stochastic frontier models are used to evaluate the impact of the 1995 renewal of regional political institutions and the 1998 tax reform (introduction of IRAP) on the efficiency of Italian regional governments. Both methodologies are applied to a longitudinal dataset, including financial and health care data disaggregated at the regional level from 1991 to 2005. Then, efficiency scores for the regional governments are used to examine the evolution of technical efficiency in the Italian health care sector. The final results provide new empirical evidence in support of the findings of recent theoretical models concernint the way in which fiscal decentralization and electoral accountability affect the efficiency of governmental activity.