Presentation by Dylan Jong, Post-Doctoral Researcher, Faculty of Economics and Business, University of Groningen, Netherlands at the 16th OECD Spatial Productivity Lab meeting on "Regional institutions and productivity: Implications for policy" held on 10 March 2022 in virtual format. More information: https://oe.cd/spl-mtg

1. DYLAN JONG
Post-Doctoral Researcher, Faculty of Economics and Business,
University of Groningen, Netherlands
Regional institutions and productivity: Implications for policy | 10 March 2022 | 14.00-15.30 | WEBINAR
#spatialproductivity
Is it only government quality that matters?
Governance arrangements and urban productivity in Europe
Email: D.M.O.Jong@rug.nl
Website: https://www.rug.nl/staff/d.m.o.jong/
Twitter: @DylanMOJong

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Governance arrangements
Urban labour productivity: GPD per worker
Quality of
government
(EQI)
Decentralisation
(LAI)
Horizontal
fragmentation

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Governance arrangements: Measures
European
Quality of
Government
Index
(EQI)*
is based on a large
citizen survey where
respondents are asked
about perceptions and
experiences with public
sector corruption,
impartiality and quality
of public services
provision
Local Autonomy
Index
(LAI)
is calculated based on
the opinions of an
expert network who
assess the autonomy
of local government of
their respective
countries on the basis
of a common code
book
Horizontal
fragmentation
Is the number of local
governments within each
FUA after factoring out
population effects
lo𝑔(𝐺𝑜𝑣′
𝑠)𝑓,2011
= 𝛼 + 𝛽1 log 𝑃𝑜𝑝 𝑓,2011
+ 𝜀𝑓,2011
*We thank Andrés Rodríguez-Pose for sharing the interpolated data.

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Estimation (multi-level model)
Urban labour productivity
Quality of
government
(EQI)
NUTS2-level
Decentralisation
(LAI)
(Mostly) country-
level
Horizontal
fragmentation
FUA-level
Controls
Population density
Area size
Elderly dependency
Youth dependency
Time and country FE
242 FUAS
154 NUTS2 regions
37 LAI areas
14 Countries
Study period: 2003-2014

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Estimation results, full model

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Marginal decentralisation effect

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Marginal government quality effect

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Results illustration
Helsinki, Finland
(predicted productivity rank #1)
EQI = 1.46
LAI = 1.49
Horizontal Fragmentation = -1,18
Prague, Czech Republic
(predicted productivity rank #112)
EQI = -0.81
LAI = -0.03
Horizontal Fragmentation = 2.17
Radom, Poland
(predicted productivity rank #242)
EQI = -0.82
LAI = 1.29
Horizontal Fragmentation = -1.00
If quality of government in Radom increases to that of Helsinki, productivity 58%
If quality of government in Prague increases to that of Helsinki, productivity will not
change noticeably (decreasing government quality also does not have sizable effects)

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Main results: The need for a comprehensive view
› The labour productivity effects of government quality, decentralisation
and fragmentation are interdependent 
In order to enhance labour productivity, different elements of this combination
might need to be adjusted depending on the specific conditions (e.g.
increasing local autonomy in the UK; decreasing horizontal fragmentation in
France)
› The most productive urban areas tend to have high government
quality, high decentralisation and low horizontal fragmentation

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faculty of economics
and business
coelo/
economics, econometrics, & finance
Thank you for your attention
Dylan M.O. Jong, PhD
Postdoctoral researcher
University of Groningen
Faculty of Economics and Business, Department of Economics, Econometrics & Finance
Centre for Research on Local Government Economics (COELO)
Email: D.M.O.Jong@rug.nl
Website: https://www.rug.nl/staff/d.m.o.jong/
Twitter: @DylanMOJong