Inter-municipal Mimicking and the Determinants of Municipal Personnel Expenditure

Abstract

　The Japanese government categorizes municipalities into groups of"similar" entities through the Categories of Similar Municipalities, and provides information on fiscal performance within the group through the Tables for Fiscal Comparison. Thus, the central government intends to let municipalities use this system to identify their"reference of comparison"and utilize its fiscal information as a reference for fiscal planning. We take advantage of this system of fiscal information to derive a municipal personnel expenditure function that is strategically dependent on other municipal personnel expenditure, and examine if interdependence among personnel expenditure exists. Our examination indeed shows that there is such fiscal interdependence.