Do Multiple Political Representatives Add Value

Should political institutions concentrate power in more hands or a single hand? This paper provides microeconomic evidence on the relationship between multiple elected representatives and economic growth. We find that increasing the number of politicians governing an area leads to greater firm entry and real economic activity. The identification strategy exploits uneven overlap of electoral and administrative boundaries, leading to a quasi-random variation in the number of politicians governing adjacent administrative units. This setup allows us to implement a geographic regression discontinuity design across boundaries separating a split (multiple politicians) unit from an unsplit (single politician) unit. Greater state efficiency, lower regulatory costs, and reduced cronyism due to increased checks and balances among multiple non-aligned politicians is the primary driver of higher firm entry.