Political representation and public contracting: Evidence from municipal legislatures

This study examines how partisan representation in multiparty legislatures affects direct expenditures, contract-allocation design and selection of politically-connected firms as suppliers in public procurement. For identification, I exploit quasi-random variation in partisan electoral outcomes near the effective representation thresholds in Czech proportional municipal elections. My regression discontinuity estimates suggest that partisan representation matters for public procurement: for instance, if local-level political parties barely enter legislatures at the expense of the national parties, municipalities decrease their direct procurement spending and allocate fewer contracts to the corporate donors of the national parties. Fewer contracts are awarded especially in pre-election years and in auctions restricting competition among procurement suppliers. The results are not associated with higher government fragmentation or selection of more competent candidates, but rather with reduced political power of the national parties.