Citizen Control and the Efficiency of Local Public Services

It is generally accepted that fiscal decentralization increases citizen control over politicians, fostering accountability and increasing efficiency. We identify the socioeconomic characteristics of citizens that increase their control over local policy makers and thus generate greater efficiency in a decentralized context. We also highlight the fiscal characteristics that influence this control and efficiency. The study examines a sample of Spanish municipalities, applying a methodology based on the conventional procedure of two-stage estimation. The results provide a certain amount of empirical evidence that suggests that the strong presence of retailers and retired people favours citizen control, which fosters accountability and efficiency. A factor that facilitates this control, and therefore greater efficiency, is the presence of low opportunity costs for obtaining information regarding local public service management. We also demonstrate that a high level of taxation does not lead to greater control by citizens and that transfers generate the ‘flypaper effect’.