Population size and the size of government

Tim Krieger and Daniel Meierrieks

No 2018-03, Discussion Paper Series from University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy

Abstract: We examine the effect of population size on government size for a panel of 130 countries for the period between 1970 and 2014. We show that previous analyses of the nexus between population size and government size were incorrectly specified, not accounting for cross-sectional dependence, non-stationarity and cointegration as well as parameter heterogeneity. Using a panel time-series approach that adequately models these issues, we find that population size has a positive long-run effect on government size. This finding suggests that the detrimental effects of population size on government size (primarily due to a greater risk of social conflict) dominate its beneficial ones (primarily due to scale economies). We also show that population size increases government size especially in countries that are vulnerable to social conflict due to ethnic heterogeneity.

Keywords: government size; country size; social conflict; ethnic fractionalization; non-stationarity; cross-sectional dependence; panel cointegration; parameter heterogeneity (search for similar items in EconPapers)
JEL-codes: H11 H50 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Population size and the size of government (2020)
Journal Article: Population size and the size of government (2020)
Working Paper: Population size and the size of government (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wgspdp:201803

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