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Legislative Representation, Bargaining Power, and the Distribution of Federal Funds: Evidence from the U.S. Senate

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  • Brian Knight

Abstract

While representation in the U.S. House is based upon state population, each state has an equal number (two) of U.S. Senators. Thus, relative to the state delegations in the U.S. House, small population states are provided disproportionate bargaining power in the U.S. Senate. This paper provides new evidence on the role of this small state bargaining power in the distribution of federal funds using data on projects earmarked in appropriations bills between 1995 and 2003. Relative to earmarks secured in House appropriations bills, Senate earmarks exhibit a small state advantage that is both economically and statistically significant. The paper also examines two theoretically-motivated channels through which this small state advantage operates: increased proposal power through appropriations committee representation and the lower cost of securing votes due to smaller federal tax shares. Taken together, these two channels explain over 80 percent of the measured small state bias. Finally, a welfare analysis demonstrates the inefficiency of hte measured small state bias.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10385.

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Date of creation: Mar 2004
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Handle: RePEc:nbr:nberwo:10385

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References

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  1. Lockwood, Ben, 1998. "Distributive Politics and the Benefits of Decentralisation," CSGR Working papers series 10/98, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
  2. Besley, Timothy J. & Coate, Stephen, 2000. "Centralized versus Decentralized Provision of Local Public Goods: a Political Economy Analysis," CEPR Discussion Papers 2495, C.E.P.R. Discussion Papers.
  3. Torsten Persson & Guido Tabellini, 1999. "Political Economics and Public Finance," NBER Working Papers 7097, National Bureau of Economic Research, Inc.
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Cited by:
  1. Boyle, Melissa A. & Matheson, Victor A., 2009. "Determinants of the distribution of congressional earmarks across states," Economics Letters, Elsevier, vol. 104(2), pages 63-65, August.
  2. Hans Pitlik & Friedrich Schneider & Harald Strotmann, 2005. "Legislative Malapportionment and the Politicization of Germany's Intergovernmental Transfer System," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 254/2005, Department of Economics, University of Hohenheim, Germany.
  3. Larcinese, Valentino & Rizzo, Leonzio & Testa, Cecilia, 2007. "Do Small States Get More Federal Monies? Myth and Reality about the US Senate Malapportionment," MPRA Paper 5339, University Library of Munich, Germany.
  4. David Albouy, 2013. "Partisan Representation in Congress and the Geographic Distribution of Federal Funds," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 127-141, March.
  5. Alexander Fink & Thomas Stratmann, 2009. "Institutionalized Bailouts and Fiscal Policy: The Consequences of Soft Budget Constraints," CESifo Working Paper Series 2827, CESifo Group Munich.
  6. Brian Knight, 2005. "Estimating the Value of Proposal Power," American Economic Review, American Economic Association, vol. 95(5), pages 1639-1652, December.
  7. Tiberiu Dragu & Jonathan Rodden, 2010. "Representation and regional redistribution in federations," Working Papers 2010/16, Institut d'Economia de Barcelona (IEB).
  8. Christian Bruns & Oliver Himmler, 2010. "Media activity and public spending," Economics of Governance, Springer, vol. 11(4), pages 309-332, November.
  9. José Bercoff & Osvaldo Meloni, 2009. "Federal budget allocation in an emergent democracy: evidence from Argentina," Economics of Governance, Springer, vol. 10(1), pages 65-83, January.
  10. Gary Hoover & Paul Pecorino, 2005. "The Political Determinants of Federal Expenditure at the State Level," Public Choice, Springer, vol. 123(1), pages 95-113, April.
  11. Lockwood, Ben, 2005. "Fiscal Decentralization: A Political Economy Perspective," The Warwick Economics Research Paper Series (TWERPS) 721, University of Warwick, Department of Economics.

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