Municipal efficiency spillovers in France

This paper provides evidence of the role of efficiency spillovers between French municipalities assessed through four levels of municipal equipment. We investigate changes in municipal efficiency for both cities possessing a certain level of public goods and cities located closer to those hosting high-rank functions. Based on a cross-sectional database pertaining to French municipalities with over 3500 inhabitants in 2018, we develop a two-stage approach. In the first stage, we estimate municipal efficiency through a robust order-m approach, while in the second stage, we run a truncated bootstrapped regression to disentangle the effect of the distance of an observed municipality to each of the four equipment levels. Our results provide evidence of efficiency spillovers where the less-endowed municipalities benefit the most from higher efficiency due to their geographical proximity to larger equipment centers.