Fiscal Federalism and Legislative Malapportionment: Causal Evidence from Independent But Related Natural Experiments

48 Pages Posted: 24 Mar 2014 Last revised: 19 Feb 2021

See all articles by Sebastian Galiani

Sebastian Galiani

University of Maryland - Department of Economics

Ivan Torre

Sciences Po - Department of Economics

Gustavo Torrens

Indiana university

Multiple version iconThere are 3 versions of this paper

Date Written: March 2014

Abstract

We exploit three natural experiments in Argentina in order to study the role of legislative malapportionment on the biased federal tax sharing scheme prevalent in the country. We do not find support to attribute it to legislative malapportionment during periods when democratic governments were in place; nor did we find any evidence that the tax sharing distribution pattern became less biased under centralized military governments. We argue that these results are attributable to two of Argentina's institutional characteristics: first, the predominance of the executive branch over the legislature; and, second, the lack of any significant difference in the pattern of geographic representation in the executive branch under democratic and autocratic governments. Thus, the observed biases in the distribution of tax revenues among the Argentine provinces are not caused by legislative malapportionment, but are instead the result of a more structural political equilibrium that transcends the geographic distribution of legislative representation and even the nature of the political regime. Our findings also illustrate the importance of informal institutions and the interactions between formal and informal institutions. Legislative malapportionment could have an innocuous influence in countries with a strong executive branch but could become a key factor in countries with an empowered Congress.

Suggested Citation

Galiani, Sebastian and Torre, Iván and Torrens, Gustavo, Fiscal Federalism and Legislative Malapportionment: Causal Evidence from Independent But Related Natural Experiments (March 2014). NBER Working Paper No. w19995, Available at SSRN: https://ssrn.com/abstract=2413343

Sebastian Galiani (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Iván Torre

Sciences Po - Department of Economics ( email )

28, rue des Saints peres
Paris, 75007
France

Gustavo Torrens

Indiana university ( email )

Wylie Hall, 100 S Woodland Ave
Bloomington, IN 47405-7104
United States
8128568131 (Phone)
47405-7104 (Fax)

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