This paper provides new evidence on the drivers of local government amalgamation and its effects on public goods provision, economic activity, and national identity. I focus on an administrative reform in Ukraine between 2015-2020, during which smaller local councils (LCs) had the opportunity to voluntarily amalgamate in order to keep a substantially larger portion of their tax revenues and gain greater autonomy over the local administration. By investigating the determinants of the willingness to amalgamate, I show that some of the pre-reform characteristics, such as tax revenues, the share of native Russian speakers, and political preferences, were not substantial predictors of the amalgamation. I estimate a staggered difference-in-differences model and show that the reform led to a cumulative increase in nightlight intensity per capita over the years following exposure. Employing the same staggered design with previously unused data on standardized college entrance exam results, I find no clear effect on Ukrainian and math scores. I further demonstrate that the reform positively impacted district level personal income tax collection. Finally, using a nationally representative repeated cross-sectional survey, I document the greater self-identification as Ukrainian as opposed to Russian in rural areas with a higher share of people living in the new local units, \textit{hromadas}. +
This paper provides new evidence on the drivers of local government amalgamation and its effects on public goods provision, economic activity, and national identity. I focus on an administrative reform in Ukraine between 2015-2020, during which smaller local councils (LCs) had the opportunity to voluntarily amalgamate in order to keep a substantially larger portion of their tax revenues and gain greater autonomy over the local administration. By investigating the determinants of the willingness to amalgamate, I show that some of the pre-reform characteristics, such as tax revenues, the share of native Russian speakers, and political preferences, were not substantial predictors of the amalgamation. I estimate a staggered difference-in-differences model and show that the reform led to a cumulative increase in nightlight intensity per capita over the years following exposure. Employing the same staggered design with previously unused data on standardized college entrance exam results, I find no clear effect on Ukrainian and math scores. I further demonstrate that the reform positively impacted district level personal income tax collection. Finally, using a nationally representative repeated cross-sectional survey, I document the greater self-identification as Ukrainian as opposed to Russian in rural areas with a higher share of people living in the new local units, hromadas.