The public sector efficiency in Italy : The case of Lombardy municipalities in the provision of the essential public services

This paper evaluates how efficient are the municipalities located in the most populous Italian Region (Lombardy) in providing essential public services: general administration, municipal and administrative police, waste collection, road network and street lighting. The empirical analysis is conducted through bootstrap Data Envelopment Analysis (DEA) on a sample of 331 municipalities with more than 5,000 inhabitants, and refers to the three years 2010, 2011 and 2012. The results highlight that there is room for substantial improvement of efficiency: the same level of output can be obtained while reducing the resources of about 33%. A second-stage truncated regression reveals that: the structure of population matters, scale effects do exist, and more financially healthy municipalities are also more efficient in providing essential services.