Legislative Malapportionment and the Politicization of Germany's Intergovernmental Transfer System

Abstract

Legislative bargaining theory suggests that fiscal transfers among member states of a federation are determined to a substantial degree by political representation effects. Malapportionment of the states'population in the legislature is claimed to lead to disproportional benefits of overrepresented states. The article analyzes empirically the determinants of funds in Germany's intergovernmental transfer system. The authors expand previous investigations to include the effects of both the bicameral system in Germany and the postreunification period. Using data for the period from 1970 to 2002, the authors find that malapportionment in the upper house leads to disproportional state shares of per capita transfers. Estimates also indicate that the impact of overrepresentation has somewhat increased over time. Disproportional representation in the lower house does not seem to matter, as the institutional framework of decision making in the lower chamber is not too supportive to constitute a bias towards overrepresented states.