Symbolic change or real benefit? The economic effects of attaining town status: Evidence from municipalities in the Wielkopolskie Voivodeship

Abstract

The aim of this article is to examine whether, and to what extent, the granting of town status has influenced local economic development. The study focuses on four municipalities in the Wielkopolskie Voivodeship, whose administrative centers were transformed into towns between 2014 and 2017 (Dobrzyca, Chocz, Jaraczewo, and Opatówek). To empirically assess the economic effects of this change in administrative status, an augmented synthetic control method was applied. It allows for isolating the impact of the administrative status change from other determinants of local economic performance by estimating the counterfactual development path – that is, the trajectory the municipality would have taken if its seat had not been granted town status. The results indicate that, in the examined municipalities, the change in the administrative status did not lead to an improvement in local economic performance. No significant responses of the analyzed indicators to the administrative promotion of municipality seats were observed, and the constructed counterfactual scenarios demonstrated that there were no persistent and significant differences between the actual observed values and those generated for the synthetic control units. These findings contribute to the public debate on the legitimacy of granting town status to small localities, particularly when such decisions are motivated by expectations of rapid economic growth or improvements in labor market conditions.