The median voter didn't show up: Costly meetings and insider rents☆

a r t i c l e i n f o How does changing from an assembly to a town-council form of government affect the way in which cities are run? Previous empirical research on this question has not found much of an impact of assemblies on aggregate outcomes such as local public expenditures or taxation. Nevertheless, the specific role of organized insiders may be important to understand how cities and towns governed by citizens' assemblies work. Existing surveys point to local workers as an important pressure group in local assemblies. Using data from local governments in New England I find that municipalities governed by assemblies pay around 4% to 10% higher salaries to their employees. This wage premium is bigger in assemblies with lower attendance, and increasing with the employees' voting power. I prove my results robust to the inclusion of an exogenous representative-government comparison group: municipalities in New York State that lie within 40 miles of the border with New England. The results demonstrate how insider groups derive some advantages from an assembly form of government. More broadly, the potential capture of assemblies by insider groups can be an important risk faced by municipalities with low citizen participation, which provides a rationale for the widespread adoption of representative government at the local level. The institutions, policies, and practices of local governance are very important to explain how cities run. An extensive literature in urban economics and local public finance (Rubenfeld, 1987) has studied how taxes, public expenditures, infrastructure provision, school quality, and zoning affect urban outcomes and growth. However, relatively less attention has been devoted to the impact of local political and governmental institutions on town and city management. This paper compares the assembly institution to its democratic counterfactual, representative government, as alternative ways to manage the provision of public goods and services in cities and towns. Previous empirical research has not found much impact of assemblies on aggregate outcomes such as local public expenditures or taxation. However, there may be more subtle ways by which local institutions impact urban governance. I hypothesize that the power of insider groups, such as government workers and local officials, becomes very important in a context of costly attendance to meetings. Empirically, I use data from local governments in New England, where many municipalities are governed by an assembly type of government — the Town Meeting. I compare the wages paid in …