Legislative Malapportionment and Economic Outcomes:

This paper addresses the issue of the endogenous choice and persistence of legislative malapportionment and analyzes its economic consequences. Legislative malapportionment denotes a wide discrepancy between the share of legislative seats and the share of population held by electoral districts. We first document that countries with higher lower chamber malapportionment have lower GDP per capita. The same relationship holds in a panel dataset for 11 Latin American countries. We then investigate the mechanism behind this correlation, drawing on the political economy literature which suggests that pre-democracy elites manipulate democracy to preserve their power. We argue that legislative malapportionment enhances the elites‟ de jure political influence by over-representing specific areas. This biased political representation survives in equilibrium as long as it helps democratic consolidation. At the same time, it reduces political competition and distorts public policies, hampering economic development. Our empirical evidence from regions within Latin American countries supports this theoretical framework. We find that overrepresented electoral districts have a higher share of delegates from parties close to the predemocracy ruling groups and also that overrepresented states receive more transfers per capita from the central government. Moreover, in the panel dataset for 11 Latin American countries, higher malapportionment increases the probability of democratic consolidation.