Extract

The optimum organizational size for the efficient delivery of public education is one of the most enduring questions in the study of public economics (see Lomax, 1943, 1952; Riew, 1966). At what level of client population can public organizations responsible for the provision of primary and secondary schooling function most efficiently? In particular, do local governments that coordinate public education benefit from economies of scale? Policy-makers across the world continually debate the merits of alternative local government structures in terms of their consequences for local service costs, often those associated with expensive labor-intensive services, such as primary and secondary schooling (e.g. Copus et al., 2005; Council of Europe, 1995). Indeed, in recent times, central governments in several countries have enacted or considered programs of local government consolidation on the grounds of efficiency. But what evidence is there to suggest that the efficiency of labor-intensive services provided by local governments will benefit from horizontal amalgamation or vertical consolidation? More specifically, what is the relationship between the size of the units in a local government system and expenditure on public education?