Political representation and effects of municipal mergers

We study the effects of municipal mergers using novel geocoded data on local public sector jobs and local politicians' place of residence. We find that the mergers had no effects on municipal expenditures overall after eight years. However, the mergers led to highly unequal geographic political representation in the post-merger councils among the merged municipalities. Small and politically marginalized municipalities experienced a substantial reduction in local public jobs in administration and health and social care services relative to the municipalities with stronger representation. Development of house prices suggests that the quality of the service-tax bundle deteriorated in these politically marginalized municipalities.