Jurisdiction Size and Local Democracy: Evidence on Internal Political Efficacy from Large-scale Municipal Reform

Optimal jurisdiction size is a cornerstone of government design. A strong tradition in political thought argues that democracy thrives in smaller jurisdictions, but existing studies of the effects of jurisdiction size, mostly cross-sectional in nature, yield ambiguous results due to sorting effects and problems of endogeneity. We focus on internal political efficacy, a psychological condition that many see as necessary for high-quality participatory democracy. We identify a quasiexperiment, a large-scale municipal reform in Denmark, which allows us to estimate a causal effect of jurisdiction size on internal political efficacy. The reform, affecting some municipalities, but not all, was implemented by the central government, and resulted in exogenous, and substantial, changes in municipal population size. Based on survey data collected before and after the reform, we find, using various difference-in-difference and matching estimators, that jurisdiction size has a causal and sizeable detrimental effect on citizens' internal political efficacy.