Local government allocation of cultural services

In the present paper, we analyse the allocation process for cultural services in Norwegian municipalities. The cultural sector at this administrative level is decomposed into the following eight subcategories: children’s and youth activities, libraries, cinemas, museums, arts dissemination, cultural heritage, cultural schools, and other cultural services. By means of budget shares for these eight cultural services and a residual sector consisting of all other municipal services, we estimate a system of demand relations which are interdependently linked to each other by a budget restriction. Our analyses are based on data from 409 out of 429 Norwegian municipalities during the period 2002–2010. In the empirical analyses, we mainly focus on the effects of income variation for the cultural services. We estimate effects of free income, matching grants to each sector, and user fees and other sector-specific income for each sector. We also estimate crowding-out effects for the cultural sectors of demographic variables indicating higher demand for services such as education, childcare, and health services. Our results confirm previous results. There are interesting differences within the group of cultural services, and these are partly related to different levels of national standardisation and regulation among the cultural services.