ZEW Economist Receives 2018 Federalism Prize

Sebastian Blesse, researcher in the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), Mannheim, received this year's prize for research on federalism and regional studies (Preis für Föderalismus- und Regionalforschung). Along with his co-author Felix Rösel from the Dresden office of the ifo Institute, Sebastian Blesse was awarded the prize for their research paper entitled “Was bringen kommunale Gebietsformen?” (“What Are the Benefits of Municipal Territorial Reforms?”) published in the journal “Perspektiven der Wirtschaftspolitik” at the end of 2017.

In their paper, the researchers deal with issues such as the returns to efficiency of regional reforms in Germany, Austria and Switzerland as well as the possible political consequences of merging multiple municipal authorities. “By implementing territorial reforms, policymakers primarily hope to use economies of scale to their advantage in order to achieve budget savings and improve the efficiency of public bodies,” explains Sebastian Blesse. “As a main result, however, we show that the expected fiscal efficiency returns from territorial reforms have been overestimated in the past.”

According to the study, evidence on significant savings or efficiency and growth effects has been sparse. On the other hand, the research findings show a significant decline in the citizens’ satisfaction with democracy, lower election turnouts and ultimately an increase in right-wing populist tendencies in those municipalities that have undergone mergers.

The prize for research on federalism and regional studies is awarded by the presidents of the state parliaments in Austria and South Tyrol as well as the Institut für Föderalismus in Austria, and comes with prize money of 4,000 euros.