Legislative Organization and Local Public Goods Provision: Evidence from Brazil

• In Event: Formal Political Economy

Abstract

What is the effect of legislative organization on local public goods provision? In this paper, I study the impact of exogenous changes in two legislative organization components: the number of legislators and their wages. First, I build a simple model of legislative decision-making, showing that increasing council size improves the provision of local public goods by raising the productivity frontier of a legislature. On the other hand, the model shows that higher salaries enhance the quality and the scope of the local public goods proposed. To test this theory, I study changes in exogenous population thresholds of city council sizes and wages in Brazilian municipalities between 2012 and 2016. I collect around 3.2 million legislative proposals in the period, classifying them into municipal versus local public goods, and further disentangle local public goods into three categories, by their capacity to produce long-lasting welfare benefits (e.g., fix a pothole versus hire physician to a local health clinic). I show that increasing legislature size raises the amount of local public goods provided at all levels while raising salaries has a significant impact on the provision of public services that have long-lasting welfare effect. The results here suggest that more politicians can increment the provision of local public services, but only increase the quality of the politicians can have a substantial impact on welfare. This paper has implications for the design of legislatures in developing democracies, especially with the increased threat placed by populist leaders.

Author

• Umberto Mignozzetti, Fundação Getulio Vargas