Measuring the Performance of Local Governments: Evidence from Mystery Calls

We analyze the mystery calls conducted over a representative sample of Italian municipalities surveying the front office services provided by the One-stop shops (OSSs) for doing business. Mystery calls are phone interviews conducted by callers who pretend to be prospective entrepreneurs wanting to start a new business in the municipality, and whose identity and purposes were not known to the OSSs respondents. The random scheduling of the interviews and the evidence collected on the days and on the number of phone calls needed by the interviewers to conduct the mystery calls make it possible to construct new objective measures of local government performance. After showing that the new indicators are well correlated with alternative measures of governments quality, we study their determinants. We find that a better performance is mainly associated with factors related to internal organization, such as a more intensive use of ICT tools and higher levels of employee expertise, while the socio-economic context does not seem to play a major role.