The Expenditure Effects of Municipal Mergers

Abstract

This paper examines the effects on expenditure of municipal mergers that took place in Japan between 1998 and 2010. We evaluated the effect of municipal mergers by comparing the changes in total expenditure between the merger group and the non-merger group in 2011. Our results indicate that municipal mergers did not lead to lower total expenditure. In addition to comparing the changes in total expenditure, we also compared the changes in most spending categories. We find that personnel expenses were higher in the merged municipalities according as the number of incorporated municipalities increases. Furthermore, according to our results the mergers tended to lead to growth in commerce and industry expenses and reduction in agriculture, forestry and fishery expenses.