Socio-economic and spatial determinants of municipal cultural spending

Abstract

The determinants of the expenditure of Austrian municipalities for cultural affairs are ascertained in a panel time series framework. The Austrian municipalities spend about € 93 per capita a year for cultural affairs (approximately 4% of the total municipal expenditure). The econometric estimations revealed that the size of the municipality, and various socio-economic, fiscal and political variables, are the main determinants of municipal cultural spending. The results of the estimations infer a rather small but nevertheless significant spatial dependence of cultural spending. An increase of 10% of cultural spending in the neighboring regions leads to an increase of 0.6–1.5% in a representative municipality (however, the potentially overlapping and contradicting reasons for spatial correlations could not be disentangled in this paper). In comparison to the spatial effects, the size of the municipality is a more significant predictor of municipal cultural spending. The larger cities provide many cultural goods and services to the surrounding areas by utilizing economies of scale and density. It can be concluded that municipalities, in particular in rural areas, should increase their efforts for co-operation in order to improve the efficiency of cultural spending.