A test of the Law of 1/n for Belgium: Does “more politicians” mean “more public spending”?

Geert Jennes

No 547283, Working Papers of VIVES - Research Centre for Regional Economics from KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics

Abstract: We investigate if a more populous or fragmented executive or legislative increases public spending, an effect known as “the Law of 1/n”. We test this for the supra-local governments of Belgium. On the basis of our dataset –including rather few “cross-sections” as well as rather few changes in our political variables of interest over time- we find few indications that more politicians or more fragmented governments lead to an increase in overall public expenditures. We find weak evidence in favour of a positive effect of a change in the size of the executive, more in particular of the number of ministers composing the governing coalition, on public spending. Our identification is based on an IV regression approach, instrumenting the number of ministers overall with their resp. number in governments in charge of a decentralisation round. Belgian governments in charge of a decentralisation round are constitutionally obliged to rely on broad parliamentary support, and therefore tend to be larger. We also find that there is no effect of a change in the size or fragmentation of the legislative on public spending.

Keywords: distributive politics; , public expenditures, fiscal federalism, politicians, political institutions (search for similar items in EconPapers)
Date: 2015
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Published in VIVES discussion paper, 2015/49 , pages 1-53

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Persistent link: https://EconPapers.repec.org/RePEc:ete:vivwps:547283

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