Opportunistic politicians and fiscal outcomes: the curious case of Vorarlberg

Using a unique set of electoral rules present in the Austrian state of Vorarlberg, we explore the question whether local electoral rules affect the size of local governments. We find evidence that party--list system is associated with higher levels of expenditure and that direct elections of the mayor are associated with lower size of the public sector. The results are robust to the possibility that electoral rules might be endogenous to the local economic and geographic conditions.