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These rules are made for spending: testing and extending the law of 1/n

Germà Bel (), Ringa Raudla (), Miguel Rodrigues () and António F. Tavares ()
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Ringa Raudla: Tallinn University of Technology
Miguel Rodrigues: University of Minho (Campus de Gualtar)
António F. Tavares: University of Minho (Campus de Gualtar)

Public Choice, 2018, vol. 174, issue 1, 41-60

Abstract: Abstract What is the influence of the rules of political representation on local spending? This research tests the law of 1/n in the Portuguese local context and finds that the law fails to apply. We suggest an alternative measure—the density of representation—to assess the impact of the rules of city council representation on local public expenditures. Density of representation is defined as the number of elected officials in the city council divided by city population. We find an S-shaped relationship between the density of representation and the level of local government expenditures. The level of municipal spending initially declines with increases in the density of representation, reflecting an increase in the ability of constituents to monitor their elected representatives. At higher levels of representation density, the relationship becomes positive, suggesting that the dynamics of the budgetary commons become salient. The relationship becomes negative again for extremely high density of representation owing to increases in the transaction costs of legislative decision-making. This paper discusses the implications of our findings for the reform of local government institutions and the rules of political representation.

Keywords: Law of 1/n; Density of representation; Local expenditures; City council (search for similar items in EconPapers)
JEL-codes: H72 H19 (search for similar items in EconPapers)
Date: 2018
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