Does the Size of the Legislature Affect the Size of Government? Evidence from Two Natural Experiments

41 Pages Posted: 25 May 2007

See all articles by Per Pettersson-Lidbom

Per Pettersson-Lidbom

Stockholm University - Department of Economics; Research Institute of Industrial Economics (IFN)

Date Written: January 30, 2006

Abstract

This paper addresses the question of whether the size of the legislature matters for the size of government. Previous empirical studies have found a positive relationship between the number of legislators and the size of government but it is questionable whether they have identified a causal relationship. In contrast, this paper uses variation in council size induced by statutory council size laws to estimate the causal effect of legislature size on government size. These laws create discontinuities in council size at certain known thresholds of an underlying continuous variable, which make it possible to generate near experimental causal mestimates of the effect of council size on government size. In contrast to previous findings, I find a negative relationship between council size and government size. The estimated elasticity is about -0.12 for Finland and -0.45 for Sweden.

Keywords: government size, legislature, legislative policy-making, distributive politics, regression-discontinuity design, natural experiment

JEL Classification: D72, D78, H71, H72

Suggested Citation

Pettersson-Lidbom, Per, Does the Size of the Legislature Affect the Size of Government? Evidence from Two Natural Experiments (January 30, 2006). Available at SSRN: https://ssrn.com/abstract=988346 or http://dx.doi.org/10.2139/ssrn.988346

Per Pettersson-Lidbom (Contact Author)

Stockholm University - Department of Economics ( email )

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Research Institute of Industrial Economics (IFN) ( email )

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