Does size matter? Evidence from municipal splits

We contribute to the limited knowledge of the consequences of municipal splits by estimating how break-ups of seven Swedish municipalities affected per capita expenditures. To predict what would have happened had the break-ups not taken place, we apply the matrix completion method with nuclear norm minimization. We find that smaller municipalities not necessarily imply higher per capita expenditures. Instead, expenditures increase in some cases, are unaffected in others, and in others, decrease. The results point to the complex nature of territorial reforms and underscore the perils of policy recommendations that take uniform outcomes of either amalgamations or break-ups for granted.