Political participation and economic development. Evidence from the rise of participative political institutions in the late medieval German Lands

Participative political institutions in late medieval cities in the German Lands had the potential to impact city size and growth. The study confirms the positive effect on economic outcomes of participative political institutions in 282 cities, but supports a more skeptical view of craft guilds. Craft guilds participating in the city council had zero or negative impact. Enfranchising citizens to elect the city government had a stable and robustly positive effect on city size and growth, but only during the medieval period. The effect of participatory institutions declines with age; they are prone to institutional degeneration and rent-seeking.