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case that the existence of nationalist parties pushing for fiscal autonomy pre-
dates both the constitutional agreement of 1978 and the subsequent conflicts
around the concretion of fiscal arrangements between Madrid and the differ-
ent regions. At the same time, however, once the status quo is in place after
the transition and consolidation of democracy (1978-1981), virtually every
conflict about the reform of fiscal federalism in Spain derives from the distribu-
tional consequences of earlier choices. In political terms, the evolution of fiscal
decentralization in Spain is an endogenous process with no critical juncture of
external origin. The initial arrangements shape the patterns of political decen-
tralization; these feed back into the system of representation, most notably
on the levels of decentralization of the party system, which in turn shapes the
evolution of fiscal federal arrangements. This dynamics speaks directly to the
third condition for causal identification, to which I turn now.
POLITICAL REPRESENTATION AND THE STATUS QUO: WHEN CAN
POLITICAL REPRESENTATION BE TAKEN AS GIVEN?
This section is concerned with the final conditions for identifying the effect
of economic geography and mobility on fiscal structures (Hypotheses 1 and
2), namely that the system of representation can be taken as given at the time
conflicts over the design of fiscal structures erupt.
Chhibber and Kollman (
2004
) have exploited the experiences of Canada,
India, the United States and the United Kingdom to argue that fiscal and admin-
istrative centralization is an important cause behind the centralization of the
party system. Their focus is on cases of policy and national party integra-
tion: “as governments centralize authority, taking powers away or imposing
new conditions on lower levels of government, voters will naturally have more
incentives to try to influence politics at higher levels. And candidates will be
more inclined to take positions on policy issues being dealt with at the higher
levels of government and make those positions centerpieces of their campaign
for office” (p.78). The same logic should apply as well in the opposite direc-
tion: as countries decentralize policy provision, political parties are expected
to decentralize their organizational structures and candidates' nomination pro-
cedures. In terms of the argument developed in the previous chapter, then, the
parameter on the importance of national elections (
) is itself endogenous with
respect to the organization and evolution of the fiscal structure.
These findings pose a potential problem for an argument that is centered
around the interplay between economic geography, in particular the geography
of income inequality, and the structure of political representation. Specifically,
they pose a problem for condition 3. If both representation and economic
geography change at the same time, it would be simply impossible to identify
the marginal effects posited by the argument. Hence the question: when can
political representation be taken as given?
The political architecture of unions includes representation of regional inter-
ests at the national level, the articulation and organization of the party system,
