Template-Type: ReDIF-Article 1.0
Author-Name: Emilio José de la Higuera-Molina
Author-Name: José Luis Zafra-Gómez
Author-Name: Ana Maria Plata-Díaz
Title:  CICLOS POLÍTICOS Y FACTORES EXPLICATIVOS DE LA EXTERNALIZACIÓN DE SERVICIOS PÚBLICOS EN LOS GOBIERNOS LOCALES
Abstract: Resumen:Diversidad de trabajos han estudiado los factores que influyen en los procesos de externalización de los servicios públicos locales. En este sentido, estudiamos la influencia de variables políticas, socioeconómicas y financieras sobre la probabilidad de externalizar los servicios mínimos obligatorios de los municipios de más de 1.000 habitantes, mediante una metodología dinámica efectuada durante un amplio horizonte temporal (2002-2013). Los resultados obtenidos aplicando un análisis de supervivencia a una muestra de 2.190 municipios indican que la proximidad de las elecciones disminuye la probabilidad de externalizar esta tipología de servicios mientras que la ideología política no influye en esta decisión.Abstract:In recent years, there has been increasing research interest in how local public finance is administered, and specifically on the factors that motivate managers to make changes in revenue and spending patterns. Diverse authors have concluded that one of the factors influencing such variations is the need for municipal governments to seek re-election as new elections approach.
Other researchers have observed that when elections are imminent, public managers may change the way in which they act (Bastida, Benito and Guillamón, 2009; Blais and Nadeau, 1992; Tellier, 2006). Similarly, Ward and John (1999) suggested that as the elections approach, governments’ manipulation of public policies in order to influence voters becomes more noticeable. In Spain, local governments are responsible for managing their own budgets and for the provision of certain public services. In view of the prominent role played by these entities, it is important to study their behaviour in general and their response, in these respects, to political considerations (Veiga and Veiga, 2007).
According to the theory of opportunistic political cycles, proposed by Binet and Pentecote (2004) and by Foucault et al. (2008) for local governments in France, and by Foremy and Riedel (2014) in Germany, local public managers employ measures such as public spending increases or tax cuts to raise their own popularity as elections draw near.
Such measures, obviously, have a negative impact on the financial condition of the municipality. Therefore, political budget cycles can provoke a worsening of the financial health of local entities (García-Sánchez et al., 2014). However, local public managers may seek to implement cost-saving measures if this can be done without prejudice to voters’ positive perceptions of the new municipal actions.
One of the measures most commonly adopted to achieve cost savings in public services is that of contracting out (XXX, 2016). The aim of the present study is to determine the influence of political cycles on this form of management of public services, distinguishing between the beginning and the end of these cycles since, according to Ward and John (1999), the measures taken to influence voters’ decisions have greater impact at the end of the political cycle than at its start. We also analyse other factors that may affect the relationship between political cycles and contracting out, such as party ideology (Bel and Fageda, 2007), the degree of political fragmentation (Ashworth et al., 2005), financial factors (XXX, 2016), such as current and capital expensive and socioeconomic issues. In relation with the empirical analysis, it is based on annual data obtained from various databases, for all Spanish municipalities with more than 1,000 inhabitants, out of a total of 3,245 municipalities. Compilation of these data allows us to include observations of the dependent variable over an extended period, as well as the temporal variation of the covariables. After the filtering process required by the heterogeneity of the information obtained, the sample was finally reduced to 2,190 municipalities  for the period 2002-2013, with a total of 26,462 observations. The services analysed were those of mandatory provision by all Spanish municipalities, according to article 26 of the Local Government Act, namely: public lighting, cemetery services, refuse collection, street cleaning, drinking water treatment and supply, drainage and sewers, access to population centres and street paving.
The present study applies survival analysis, a method that, according to González-Gómez and Guardiola (2009), is more appropriate for capturing reality than more common methods such as discrete choice, since it better explains the complexity of the situation, by expanding the range of possibilities. Our analysis, thus, takes into account the fact that the probability of a municipality contracting out its services may vary over time. Unlike discrete choice models, survival analysis enables us to estimate the influence of the passage of time, which is common to all municipalities. Determining the pattern of duration dependence enables us to determine whether the passage of time has a positive, negative or neutral influence on the probability of the decision, before controlling for other explanatory variables (González-Gómez and Guardiola, 2009).
The results obtained indicate that contracting out is influenced by various explanatory factors. Thus, current spending has a significant, positive impact on the probability of services being contracted out, while capital expenditure has the opposite effect. When there is a political change in the municipal government, from a progressive party to a conservative one, services are less likely to be contracted out. With respect to gender questions, contracting out is less likely when the mayor is a woman. Furthermore, our results show that the time factor is significant; in the year before elections and in the year when they are held, there is a lower probability of municipal services being contracted out. Finally, our findings suggest that the global financial and economic crisis stimulated the contracting out of mandatory public services. For the type of services examined in this study, this variable has a significant negative effect on the probability of contracting out taking place.
Ultimately, the main conclusion is that we present new evidence of the above-mentioned relationships, in our analysis of political, socioeconomic and budget variables. We also establish that the passage of time increases the likelihood of mandatory public services being contracted out. Nevertheless, this analysis clearly demonstrates the existence of opportunistic political cycles, since during the year before elections and in the election year itself, there was a lower probability of public services being contracted out. 
In the other hand, the political variables considered were found to act in different ways; thus, the ideology of the governing party did not seem to influence the probability of contracting out, while the presence of political fragmentation (i.e., a municipal government in coalition) had a significant positive effect in this respect.
Finally, this paper presents an important conclusion, one that is novel in this area, namely that opportunistic political cycles are a relevant factor to processes by which mandatory municipal services are contracted out. This relationship has not been studied previously, and thus the main contribution of this study is the evidence presented of a negative significant relationship between these political cycles and contracting out.
Classification-JEL: R1
Keywords: Financiación de Servicios Públicos, Externalización, Ciclos Políticos, Ayuntamientos, Análisis Supervivencia, Public Services, Contracting Out, Political Cycles, Financial sufficiency of local governments, Survival Analysis
Pages: 105-123
Volume: 2
Year: 2018
File-URL: http://www.revistaestudiosregionales.com/documentos/articulos/pdf-articulo-2547.pdf
File-Format: Application/pdf
Handle: RePEc:rer:articu:v:2:y:2018:p:105-123