Valentino Larcinese, Leonzio Rizzo and Cecilia Testa

Published April 2009

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We analyze the relationship between senate malapportionment and the allocation of the US federal budget to the states during the period 1978-2002. A substantial literature originating from the influential paper by ?) finds that small and overrepresented states get significantly larger shares of federal funds. We show that these studies suffer from fundamental identification problems and grossly overestimate the impact of malapportionment. Most of the estimated impact is not a scale but a change effect. Rather than evidence of ”small state advantage', we find that states with fast growing population are penalized in the allocation of the federal budget independently of whether they are large or small.