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Abstract:
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Government activity constitutes a large portion of the economy and the public often believes that governments are inefficient and ineffective. However, quantitatively demonstrating factors that influence government efficiency and performance has been challenging. Without such measures, governments have been slow to invest in their managers and slow to implement reforms promising efficiency and performance gains.
Are well-managed states able to spend less of their revenue on government administration and devote more to public services? This paper answers that question by building a linear regression model and studying the effect of a quantitative measure of management capacity on the level of expenditures state governments spend for central management and financial administration. As the data show, states with stronger management capacity spend significantly fewer resources on government administration. Such states could reduce citizens' tax burdens or reallocate those resources to other programs and services. |