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Do bigger legislatures lead to bigger government? Evidence from a Brazilian municipal council reform

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  • Schneider, Rodrigo
  • Veras, Henrique

Abstract

Do bigger legislatures lead to bigger government? We exploit a Brazilian reform that allocated the number of municipal council seats based on population thresholds in a regression discontinuity design. We find that larger councils have significantly higher public expenditures on social goods and legislative costs. Increased spending is partly financed by significantly higher local tax revenues and is driven by a less salient form of tax to voters – on services – than property taxes. As a potential explanation for our findings, we show that, more council seats led to greater political diversity.

Suggested Citation

  • Schneider, Rodrigo & Veras, Henrique, 2023. "Do bigger legislatures lead to bigger government? Evidence from a Brazilian municipal council reform," LSE Research Online Documents on Economics 120411, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:120411
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    File URL: http://eprints.lse.ac.uk/120411/
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    References listed on IDEAS

    as
    1. Peter Egger & Marko Koethenbuerger, 2010. "Government Spending and Legislative Organization: Quasi-experimental Evidence from Germany," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 200-212, October.
    2. Matias D. Cattaneo & Michael Jansson & Xinwei Ma, 2018. "Manipulation testing based on density discontinuity," Stata Journal, StataCorp LP, vol. 18(1), pages 234-261, March.
    3. Pettersson-Lidbom, Per, 2012. "Does the size of the legislature affect the size of government? Evidence from two natural experiments," Journal of Public Economics, Elsevier, vol. 96(3), pages 269-278.
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    More about this item

    Keywords

    legislature size; municipal councils; local taxes; government expenditure; regression discontinuity; Brazil;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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