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Cooperation among local governments has been encouraged to enable the aggregation of resources and improved public sector efficiency. The objective of this article is to contribute to the emerging literature on the factors driving intermunicipal cooperation. Using a unique panel dataset of 36,000 French municipalities for 1995‐2002, we estimate the relationship between cooperation decision and the fiscal revenues raised to provide local public goods. We find that the cooperation choice of neighboring municipalities is extremely relevant for the cooperation decision. A municipality will be more inclined to join an existing community if its neighbors have already joined an intermunicipal jurisdiction. We also find evidence that, ceteris paribus, a positive difference between the expected fiscal revenues of a cooperating locality and the actual revenues realized by an isolated locality is required to set up the agreement.

We document an episode with considerable tax avoidance that occurred in Italy after 2008 when the Italian government reformed the property taxation by abolishing taxation on principal residences and increasing taxation on secondary properties. In presence of a very low inter vivos gift tax, Italian families found it benecial to redistribute properties among their members. Dierence-in-dierence estimates indicate that property tax reform increased the probability that high-wealth donors made an inter vivos property gift by 3 percentage points and the size transferred by 4 square meters relative to less wealthy donors. Our estimates allow us to compute (back of the envelope) the amount of tax avoidance due to inter vivos transfer. The amount is around 78 million euros, or 4 percent of the annual tax revenue from principal residences.

We document an episode with considerable tax avoidance that occurred in Italy after 2008 when the Italian government reformed the property taxation by abolishing taxation on principal residences and increasing taxation on secondary properties. In presence of a very low inter vivos gift tax, Italian families found it beneficial to redistribute properties among their members. Difference-in-difference estimates indicate that property tax reform increased the probability that high-wealth donors made an inter vivos property gift by 3 percentage points and the size transferred by 4 square meters relative to less wealthy donors. Our estimates allow us to compute (back of the envelope) the amount of tax avoidance due to inter vivos transfer. The amount is around 78 million euros, or 4 percent of the annual tax revenue from principal residences.

This paper investigates the effect of the lockdown on COVID-19 infections. After the 22nd of March 2020, the Italian government shut down many economic activities to limit the contagion. Sectors deemed essentials for the economy were, however, allowed to remain active. We exploit the distribution of the density of essential workers across provinces and rich administrative data in a difference in difference framework. We find that a standard deviation increase in essential workers per square kilometre leads to an additional daily registered case per 100,000 inhabitants. This is a sizeable impact, and it represents about 18% of the daily increase in COVID-19 cases after the 22nd of March. Back of envelope computations suggest that the about one third of the cases considered could be attributed to the less stringent lockdown for essential sectors, with an additional 107 million Euros in direct expenditure. Although this assessment should be taken with caution, this suggests that the less stringent lockdown came at moderate public health related economic costs. In addition, we find that these effects are heterogeneous across sectors, with services having a much larger impact than Manufacturing, while there are only small differences across geographic areas. These results are stable across a wide range of specifications and robustness check.

Informal employment is a pervasive and persistent feature of most developing and developed economies. Labour taxation and labour market regulations are deemed two major causes for operating in the informal sector. Using data from France, Italy, and Spain, we analyse gross job flows and gross worker flows in the formal and informal sectors in the presence of lenient employment protection legislation, and investigate the way traditional policy interventions may favour transitions from one sector to the other. We show that optimal outcomes in terms of reduction and formalisation of informal jobs across the three countries examined are achieved with the combination of lower payroll taxes for permanent contracts and higher inspection rate for firms operating in the informal sector. Coupling lower firing costs with more frequent labour inspections also reduces informality, but this comes at the cost of an increased ratio of temporary to total employment.

This paper studies the impact of municipal non-residential property taxation on firms' performance using a panel data of italian manufacturing firms in 2001-2010. In the spirit of Duranton et al. (2011), we use a pairwise spatial difference instrumental variable estimator which allows to tackle the endogeneity of local taxation. As well as providing robust inference to arbitrary cross-sectional dependence and serial correlation, our empirical strategy also improves on existing work by exploiting the exogenous variation in local taxes generated by the political alignment of each jurisdiction with the central government. We find that non-residential property taxation exert a negative impact on firms' employment, capital and sales to such an extent as to significantly affect total factor productivity.

Cooperation among local governments has been encouraged to enable the aggregation of resources and improved public sector efficiency. However, if cooperation through the joint delivery of local public services is likely to be welfare enhancing for the agglomeration, but will lead to losses for one of the parties, it is unlikely that the losing municipality will cooperate. Using a unique panel dataset of 30,000 French municipalities for 1995-2003, we estimate the relationship between cooperation decision and the fiscal revenues raised to provide local public goods. We employ a new econometric strategy based on Lee (1978), developing a non linear method controlling for fixed effect, endogenous covariates and cluster standard error. We find evidence that a positive difference between the expected fiscal revenues of a cooperating locality and the actual revenues realized by an isolated locality significantly increases the probability of joining an inter-municipal community.

Cooperation among local governments has been encouraged to enable the aggregation of resources and improved public sector efficiency. However, if cooperation through the joint delivery of local public services is likely to be welfare enhancing for the agglomeration, but will lead to losses for one of the parties, it is unlikely that the losing municipality will cooperate. Using a unique panel dataset of 30,000 French municipalities for 1995-2003, we estimate the relationship between cooperation decision and the fiscal revenues raised to provide local public goods. We employ a new econometric strategy based on Lee (1978), developing a non linear method controlling for fixed effect, endogenous covariates and cluster standard error. We find evidence that a positive difference between the expected fiscal revenues of a cooperating locality and the actual revenues realized by an isolated locality significantly increases the probability of joining an inter-municipal community.

Cooperation among local governments has been encouraged to enable the aggregation of resources and improved public sector efficiency. However, if cooperation through the joint delivery of local public services is likely to be welfare enhancing for the agglomeration, but will lead to losses for one of the parties, it is unlikely that the losing municipality will cooperate. Using a unique panel dataset of 30,000 French municipalities for 1995-2003, we estimate the relationship between cooperation decision and the fiscal revenues raised to provide local public goods. We employ a new econometric strategy based on Lee (1978), developing a non linear method controlling for fixed effect, endogenous covariates and cluster standard error. We find evidence that a positive difference between the expected fiscal revenues of a cooperating locality and the actual revenues realized by an isolated locality significantly increases the probability of joining an inter-municipal community.

Cooperation among local governments has been encouraged to enable the aggregation of resources and improved public sector efficiency. However, if cooperation through the joint delivery of local public services is likely to be welfare enhancing for the agglomeration, but will lead to losses for one of the parties, it is unlikely that the losing municipality will cooperate. Using a unique panel dataset of 30,000 French municipalities for 1995-2003, we estimate the relationship between cooperation decision and the fiscal revenues raised to provide local public goods. We employ a new econometric strategy based on Lee (1978), developing a non linear method controlling for fixed effect, endogenous covariates and cluster standard error. We find evidence that a positive difference between the expected fiscal revenues of a cooperating locality and the actual revenues realized by an isolated locality significantly increases the probability of joining an inter-municipal community.

Cooperation among local governments has been encouraged to enable the aggregation of resources and improved public sector efficiency. However, if cooperation through the joint delivery of local public services is likely to be welfare enhancing for the agglomeration, but will lead to losses for one of the parties, it is unlikely that the losing municipality will cooperate. Using a unique panel dataset of 30,000 French municipalities for 1995-2003, we estimate the relationship between cooperation decision and the fiscal revenues raised to provide local public goods. We employ a new econometric strategy based on Lee (1978), developing a non linear method controlling for fixed effect, endogenous covariates and cluster standard error. We find evidence that a positive difference between the expected fiscal revenues of a cooperating locality and the actual revenues realized by an isolated locality significantly increases the probability of joining an inter-municipal community.