Incentives to Local Public Service Provision : An Evaluation of Italy's Obiettivi di Servizio

Set up by the Italian central government and implemented in the areas of the country that are lagging behind, Obiettivi di Servizio is an innovative scheme designed to encourage local authorities to reach given targets for public service provision in the areas of education, childcare and elderly care, waste management, and water supply. The paper makes an econometric evaluation of the scheme's effectiveness. Our findings suggest that the program was only partially successful, with considerable differences across regions and targets. An important driver of effectiveness was local institutional quality, while some features of the scheme – such as the common targets and the distribution of the pledges – might have impacted negatively on local performance. We also find signs of displacement effects: local authorities involved in the program might have concentrated on the targets to the detriment of other local public services