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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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Publication status: published as Knight, Brian. "Legislative Representation, Bargaining Power, and the Distribution of Federal Funds: Evidence from the U.S. Senate." Economic Journal 118, 532 (October 2008): 1785-1803.
Handle: RePEc:nbr:nberwo:10385

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  1. 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.
  2. Persson, Torsten & Tabellini, Guido, 1999. "Political Economics and Public Finance," CEPR Discussion Papers 2235, C.E.P.R. Discussion Papers.
  3. Lockwood, B., 1998. "Distributive Politics and the Benefits of Decentralization," The Warwick Economics Research Paper Series (TWERPS) 513, University of Warwick, Department of Economics.
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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. Alexander Fink & Thomas Stratmann, 2009. "Institutionalized Bailouts and Fiscal Policy: The Consequences of Soft Budget Constraints," CESifo Working Paper Series 2827, CESifo Group Munich.
  3. Brian Knight, 2005. "Estimating the Value of Proposal Power," American Economic Review, American Economic Association, vol. 95(5), pages 1639-1652, December.
  4. Valentino Larcinese & Leonzio Rizzo & Cecilia Testa, 2009. "Do Small States Get More Federal Monies?Myth and Reality About the US SenateMalapportionment," STICERD - Economic Organisation and Public Policy Discussion Papers Series 007, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  5. Leonzio Rizzo & Valentino Larcinese & Cecilia Testa, 2012. "Why Do Small States Receive More Federal Money? US Senate Representation and the Allocation of Federal Budget," Working Papers 201215, University of Ferrara, Department of Economics.
  6. Hans Pitlik & Friedrich Schneider & Harald Strotmann, 2005. "Legislative Malapportionment and the Politicization of Germany's Intergovernmental Transfer System," IAW Discussion Papers 19, Institut für Angewandte Wirtschaftsforschung (IAW).
  7. Tiberiu Dragu & Jonathan Rodden, 2010. "Representation and regional redistribution in federations," Working Papers 2010/16, Institut d'Economia de Barcelona (IEB).
  8. David Albouy, 2009. "Partisan Representation in Congress and the Geographic Distribution of Federal Funds," NBER Working Papers 15224, National Bureau of Economic Research, Inc.
  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. Lockwood, Ben, 2005. "Fiscal Decentralization: A Political Economy Perspective," The Warwick Economics Research Paper Series (TWERPS) 721, University of Warwick, Department of Economics.
  11. Christian Bruns & Oliver Himmler, 2010. "Media activity and public spending," Economics of Governance, Springer, vol. 11(4), pages 309-332, November.
  12. 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.

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