Wpływ podziałów gmin i powiatów w Polsce na koszty ich funkcjonowania
The impact of territorial split of municipalities and counties on their operating costs

Summary/Abstract: Debates on the impact the size of sub-national jurisdiction has on the costs of public service delivery have a very long tradition, but in spite of multiple empirical studies, results are still far from conclusive. Methodologically rigid studies of the relationship, based on data from Poland, have been so far very rare and the paper tries to contribute to filling the gap in our knowledge. The authors apply a quasi-experimental scheme of synthetic control method for Polish county and municipal fragmentation to analyze the impact of territorial reform on administrative spending as well as on the operating surplus of the budget. The analysis clearly confirms the existence of the economy of scale in administrative services. The result concerning operating surplus is less clear. There are signs of scale economies on a county level, but the results for municipalities are more ambiguous – there are unexpected signs of positive impacts of fragmentation (diseconomy of scale) occurring after a transitional period related to the high transaction costs of the reform. The difference between the results for counties and municipalities may be interpreted as a result of: (1) the larger financial autonomy of Polish municipalities; (2) the different scope of services delivered by both tiers; (3) the fact that municipalities are more embedded in local communities, allowing them to utilize potential benefits of small scale, as suggested by public choice theory.

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