Regional governments in the rural space: the effectiveness of dual-tier regional councils

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The fiscal decentralization literature explores the efficient structure of local governments. However, little consideration has been given to the efficient structure of rural local governments. In this study we show that a dual-tier local government structure in rural areas is more efficient than the prevalent unitary structure. Specifically, we demonstrate that a regional council that incorporates many small villages is more efficient than when each village operates as an independent local government. We present a theoretical model and provide a simulation of the model using Israeli municipal data, which combines both unitary and dual-tier structures. The simulation uses the unitary small towns as the training set and the villages within regional councils as the test set. It thus calculates the cost structure of villages within regional councils based on the data of unitary small towns. The results indicate that most villages that are part of a regional council operate more efficiently than their simulated independent unitary counterparts. Based on the findings, we suggest an alternative lower level local government structure for rural communities that adds a mezzanine dual-tier structure.

Original languageEnglish
Pages (from-to)1816-1831
Number of pages16
JournalRegional Studies
Issue number9
StatePublished - 2023

Bibliographical note

Publisher Copyright:
© 2023 Regional Studies Association.


  • asymmetric federalism
  • fiscal decentralization
  • inter-municipal cooperation
  • local government efficiency frontier
  • local government structure
  • regional councils
  • rural villages

ASJC Scopus subject areas

  • General Environmental Science
  • General Social Sciences


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