Local economic impacts of legislative malapportionment

Malapportionment is a common and persistent feature of electoral systems in many countries. In Japan, an electoral reform largely equalized the geographical distribution of representation for the 1996 Lower House election, weakening the bargaining position of delegates from historically over-represented regions. We document that central government transfers declined more in over-represented municipalities after the reapportionment, relative to under-represented municipalities, but interestingly, we do not detect significant job losses in over-represented municipalities. The results from the disaggregated industry-level data show that over-represented municipalities lost jobs in the construction sector, which is dependent on public infrastructure projects, while experiencing an offsetting gain in employment in the wholesale and retail sector and, to a smaller extent, the manufacturing sector, which exhibited relatively high productivity growth at the time.