Impact of COVID-19 Pandemic on Budgets of Local Government Units. An Ex-post NUTS4 Level Analysis
DOI:
https://doi.org/10.52152/23.2.138-150(2025)Keywords:
local government units’ budgets, pandemic, COVID-19, NUTS4, subsidiesAbstract
There is a rich body of literature on the impact of COVID-19 on various economic areas of countries, but there is a literature gap in terms of the ex post impact assessment of the pandemic on smaller government units while differentiating this impact based on the inherent industrial profile of those units. To fill this gap; hence, to examine if such an impact and differentiation exist, we employed a series of econometric models based on data from NUTS4 government units in Poland (29040 observations). Obtained results show that the impact of COVID-19 on studied local government units’ budgets was positive and it differed across various industry profiles. We attribute the first finding to the concept of overcompensation provided to local economic entities by the government and the second to the uneven impact of the studied pandemic across the industries, also receiving varying levels of support from the government during a pandemic.
References
Agrawal, D. R., & Shybalkina, I. (2023). Online shopping can redistribute local tax revenue from urban to rural America. Journal of Public Economics, 219, 104818. doi:10.1016/j.jpubeco.2022.104818
Arnon, A., Ricco, J., & Smetters, K. (2020). Epidemiological and economic effects of lockdown. Brookings Papers on Economic Activity, 61-99.
Bailey, D., Clark, J., Colombelli, A., Corradini, C., De Propris, L., Derudder, B., . . . Usai, S. (2020). Regions in a time of pandemic. Regional Studies, 54(9), 1163-1174. doi:10.1080/00343404.2020.1798611
Barrero, J. M., Bloom, N., & Davis, S. J. (2020). COVID-19 is also a reallocation shock (No. w27137). doi:10.3386/w27137
Cernenko, T., Neubauerova, E., & Zubalova, A. (2021). Impact of the COVID-19 pandemic on the Budget of Slovak local governments: Much Cry and little wool?. Scientific Papers of the University of Pardubice, Series D: Faculty of Economics and Administration, 29(1). doi:10.46585/sp29011249
Chernick, H., Copeland, D., & Reschovsky, A. (2020). The fiscal effects of the COVID-19 pandemic on cities: An initial assessment. National Tax Journal, 73(3), 699-732. doi:10.17310/ntj.2020.3.04
Clemens, J. (2022, March 29). The resilience of state and local government budgets in the pandemic. Retrieved from https://econofact.org/the-resilience-of-state-and-local-government-budgets-in-the-pandemic
Clemens, J., & Veuger, S. (2020). Implications of the COVID-19 pandemic for state government tax revenues. National Tax Journal, 73(3), 619-644.
Congressional Research Services. (2021). Global economic effects of COVID-19 (R46270). Retrieved from https://sgp.fas.org/crs/row/R46270.pdf
De Hoyos, R., & Sarafidis, V. (2006). Testing for cross-sectional dependence in panel-data models. Stata Journal, 6, 482-496.
Emergency Governance Initiative. (2020). The COVID-19 Response: Governance Challenges and Innovations by Cities and Regions—Emergency Governance Initiative (Analytics Note #2). Retrieved from https://www.lse.ac.uk/Cities/Assets/Documents/EGI-Publications/AN02-EN.pdf
Emergency Governance Initiative. (2021). The impact of the COVID-19 pandemic on subnational finances—Emergency governance initiative (Analytics Note #3). Retrieved from https://www.lse.ac.uk/Cities/Assets/Documents/EGI-Publications/AN03-EN-v4.pdf
Espitia, A., Matto, A., Rocha, N., Ruta, M., & Winkler, D. (2022). Impacts of COVID-19 on global supply chains: Facts and perspectives. The World Economy, 45, 561-589.
European Committee of Regions. (2020). EU annual regional and local barometer: Counting the cost of the COVID pandemic on the EU’s regions, cities and villages. doi:10.2863/314510
Field, A. (2013). Discovering statistics using IBM SPSS Statistics. Thousand Oaks, CA: Sage.
Fonesca, L. M., & Azevedo, A. L. (2020). COVID-19: Outcomes for global supply chains. Management & Marketing, 15(1), 424-438.
Gopinath, G. (2020). The Great Lockdown: Worst economic downturn since the great depression. Retrieved from https://www.imf.org/en/Blogs/Articles/2020/04/14/blog-weo-the-great-lockdown-worst-economic-downturn-since-the-great-depression
Green, D., & Loualiche, E. (2021). State and local government employment in the COVID-19 crisis. Journal of Public Economics, 193, 104321. doi:10.1016/j.jpubeco.2020.104321
Hejazi, W., & Tang, J. (2021). Canadian FDI in a Post COVID-19 World: Have we Reached the Tipping Point?. Transnational Corporations Review, 13(1), 88-108. doi:10.1080/19186444.2020.1863118
Hitt, M. A., Holmes Jr., R. M., & Arregle, J. L. (2021). The (COVID-19) Pandemic and the New World (Dis)Order. Journal of World Business, 56. doi:10.1016/j.jwb.2021.101210
Ho, L. T., & Gan, C. (2021). Foreign direct investment and world pandemic uncertainty index: Do health pandemics matter?. Journal of Risk and Financial Management, 14.
Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal StataCorp LP, 7(3), 281-312.
International Monetary Fund. (2020a). World Economic Outlook, October 2020: A long and difficult ascent. Retrieved from https://www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october-2020
International Monetary Fund. (2020b). World Economic Outlook. The great lockdown. Retrieved from https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020
Kancelaria Sejmu. (2022). Obwieszczenie Marszałka Sejmu Rzeczypospolitej Polskiej: z dnia 7 października 2022 r.—W sprawie ogłoszenia jednolitego tekstu ustawy o dochodach jednostek samorządu terytorialnego. Retrieved from https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20220002267/T/D20222267L.pdf
Kochanov, P., Hong, Y., & Mutambatsere, E. (2020). COVID-19’s impact on sub-national governments. Retrieved from https://www.ifc.org/content/dam/ifc/doc/mgrt/ifc-covid19-municipalities-final102120-web.pdf
Lavopa, A., & Donnelly, C. (2023). Socioeconomic resilience during the COVID-19 pandemic. The role of industrial capabilities. Structural Change and Economic Dynamics, 67, 44-57. doi:10.1016/j.strueco.2023.06.004
Mackiewicz, M., Radło, M. J., & Szczech-Pietkiewicz, E. (2022). Impact of COVID-19 pandemic on local finance and development strategies. Case of urban and rural areas in the Mazovia region. Lex Localis - Journal of Local Self-Government, 20(4), 809-836. doi:10.4335/20.4.809-836(2022)
Malinowska-Misiąg, E. (2022). Finanse jednostek samorządu terytorialnego w Polsce w pierwszym roku pandemii. Optimum Economic Studies, 1(107), 48-63. doi:10.15290/oes.2022.01.107.04
McMaster, M., Nettleton, C., Tom, C., Xu, B., Cao, C., & Qiao, P. (2022). Risk management: Rethinking fashion supply chain management for multinational corporations in light of the COVID-19 outbreak. Journal of Risk and Financial Management, 13(8), 1-16. doi:10.3390/jrfm13080173
Napiórkowski, T. (2022). Impact of COVID-19 pandemic on foreign direct investment—The world perspective. Optimum. Economic Studies, 4(110), 67-80. doi:10.15290/oes.2022.04.110.05
OECD. (2020a). COVID-19 and fiscal relations across levels of government. doi:10.1787/ab438b9f-en.
OECD. (2020b). The territorial impact of COVID-19: Managing the crisis across levels of government. doi:10.1787/d3e314e1-en
OECD. (2020c). The impact of the COVID-19 crisis on regional and local governments: Main findings from the joint CoR-OECD survey (OECD Regional Development Papers No.5). doi:10.1787/fb952497-en
Raza, S. H. (2014). Exploring the determinants of financial development (Using panel data on developed and developing countries). Journal of Finance and Economics, 2(5), 166-172.
Sapat, A., Lofaro, R. J., & Trautman, B. (2022). Policy responsiveness and institutions in a federal system: Analyzing variations in state-level data transparency and equity issues during the COVID-19 pandemic. International Journal of Disaster Risk Reduction, 77. doi:10.1016/j.ijdrr.2022.103066
Son, H. (2016). Trust, economic growth and importance of the institution. International Journal of Economic Sciences, 5(4), 32-50.
Statistics Poland. (2022). Gospodarka finansowa jednostek samorządu terytorialnego 2021 [Financial economy of local government units 2021]. Retrieved from https://stat.gov.pl/obszary-tematyczne/rachunki-narodowe/statystyka-sektora-instytucji-rzadowych-i-samorzadowych/gospodarka-finansowa-jednostek-samorzadu-terytorialnego-2021,5,18.html
Statistics Poland. (2023). Local Data Bank [Dataset]. Retrieved from https://bdl.stat.gov.pl/bdl/dane/podgrup/temat
Supreme Audit Office. (2022). Problemy gmin z podatkami. Retrieved from https://www.nik.gov.pl/najnowsze-informacje-o-wynikach-kontroli/dochody-wlasne-gmin.html#
Tatsuya, I., & Nobuo, A. (2023). Impact of COVID-19 on local public finance―Did every individual local government’s balance of general account worsen in the COVID-19 Pandemic?. Policy Research Institute, Ministry of Finance, Japan, Public Policy Review, 19(2), 1-24.
UNCTAD. (2020). World Investment Report 2020. International Production beyond the Pandemic. New York, NY: United Nations Publications.
UNCTAD. (2021). World Investment Report 2021. Investing in Sustainable Recovery. New York, NY: United Nations Publications.
Wooldridge, J. M. (2009). Introduction to econometrics. A modern approach. Boston, MA: Cengage.
Xu, Z., Elomri, A., Kerbache, L., & El Omri, A. (2020). Impacts of COVID-19 on global supply chains: Facts and perspectives. IEEE Engineering Management Reviw, 48(3), 153-166.
Życzkowska, E., & Dziuba, J. (2023). Municipal own-source revenues in times of the COVID-19 pandemic. Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu, 67(2), 170-177.
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Lex localis - Journal of Local Self-Government
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
