Decreasing the number of municipalities is unprofitable

Political parties and an official study group looking for cutbacks have proposed to decrease the number of municipalities. They think this will save a lot of money. This is however not the case, Maarten Allers writes in the economists' journal ESB. Allers is director of research institute COELO, connected to FEB.

The idea is very simple. Fewer municipalities means fewer mayors, fewer aldermen and fewer councillors. That would of course save money. On the other hand however, it would also involve extra costs, for example for the management layers necessary to coordinate the activities of a large organization. Whether or not scaling-up is profitable cannot be predicted that easily.

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