Development via Administrative Redistricting: Evidence from Brazil

Abstract

We exploit a large redistricting episode to examine if, and how, administrative unit splits have long-run effects on local development in Brazil. Using a rich panel of administrative and spatial data, we compare municipalities whose requests to split were approved to those with unapproved requests due to a unique policy change curbing the creation of new municipalities. We find that splitting leads to an expansion of the public sector and improvements in public service delivery in new municipalities without generating significant spillover effects on the formal local economy. We show that splitting reduces physical remoteness to the headquarters and allows new municipalities to better adapt public policies to local preferences. Our findings inform the equity-efficiency trade-off embedded in decentralization reforms worldwide.

Keywords: redistricting, decentralization, political boundaries, elite capture, development

JEL Classification: O12