Many countries are reallocating tasks and powers to more central levels of government. To identify centralization's welfare effects, I use a difference-in-differences design that relies on time and cross-cantonal variation in the implementation of centralization reforms in Switzerland. I find that centralization provokes significant decreases in residents' life satisfaction. I identify one mechanism driving the effect: the procedural disutility that individuals experience from having less influence over the formulation of political decisions. This effect is largest among individuals with higher expected benefits from being involved in the political decision process, with detrimental effects on local political participation.
I am grateful to Clément Bosquet, Andrew Clark, Sergei Guriev, Steve Pischke, Nattavudh Powdthavee, Eugenio Proto, Claudia Senik, and Aloïs Stutzer for helpful comments and discussions. I also thank seminar and conference participants at the LSE, PSE, and ESE and the IAAE, AFSE, LAGV, RES, and SAEE meetings. This work was supported by the U.S. National Institute on Aging, the John Templeton Foundation, the What Works Centre for Wellbeing, and the French National Research Agency Grant (ANR-17-EURE-0020).
A supplemental appendix is available online at https://doi.org/10.1162/rest_a_00894.