No. 786 - Public sector efficiency and political culture

The capability of a country's public sector to provide high-quality goods and services in a cost-effective way is crucial to fostering long-term growth. In this paper we study the determinants of public service efficiency (PSE) and in particular the role of citizens' political values. Indeed, we argue that citizens' willingness to invest time and effort monitoring public affairs is necessary if policy-makers are to be held accountable for what they do and deterred from wasting public resources. Contrary to other papers, our empirical analysis exploits within-country variation, therefore reducing the risk of omitted variable bias and implicitly controlling for differences in formal institutions. First, we compute PSE measures for several public services (namely education, civil justice, healthcare, childcare and waste disposal) for the 103 Italian provinces; then we show that a higher degree of political engagement increases PSE. This remains true even after controlling for the possible endogeneity of political culture. In our analysis, values specifically related to the political sphere are kept distinct from generically pro-social values. Our results suggest that the latter have no independent impact on PSE.