The impact of political and non-political officials on the financial management of local governments

This paper investigates the impact of non-political administrators on the financial management of local governments. The activity of prefectorial officials is compared with the activity of elected mayors exploiting data extracted from a panel of 7826 Italian municipalities from 2007 to 2018. To address the potential confounding effects and selection biases, we combine a Difference in Difference strategy with machine learning methods for counterfactual analysis. Results show that non-political administrators bring higher financial autonomy and higher collection capacity, raising more revenues at local level. This is consistent with the hypothesis that, since they do not respond to electoral incentives, non-political administrators have lower motivations to behave strategically, not taking their own interests about electoral successes into account when they must choose the proportion of local versus external revenues for financing local expenditure.