The effect of inter-municipal cooperation on social assistance programs: Evidence from housing allowances in England

Abstract

Decentralized implementation of means-tested social assistance programs requires significant organizational capacity among local governments. For other types of local public service, like refuse collection and utilities provision, inter-municipal cooperation has proven capable of reducing the cost of subnational policy implementation, especially for smaller municipalities. But few impact evaluations test whether the same benefits can be achieved for less capital-intensive and more co-produced services, like social assistance. Moreover, most evaluations focus on production costs alone, despite the potential trade-off with service quality. We analyze panel data describing both the cost and quality of housing allowance administration for 314 local authorities in England between 2009 and 2019, during which time 80 switched from autonomous services to inter-municipal cooperation. Using coarsened exact matching and stacked difference-in-differences, we find no evidence of short-term savings after cooperation, and only weak indications thereafter. We also observe declining processing speeds, increased maladministration, and signs of reduced payment accuracy, though mostly these are temporary effects. Altogether, these results suggest that, in this setting, inter-municipal cooperation may be unsuited to labor-intensive public services; that short- and long-term effects can differ; and that, even in the absence of a profit motive, quality shading remains a risk in cooperation reforms.