The manual states that it depends on the government, and that's all it says.
In the previous civ series it basically treated that city's resources as the next best government, and for democracies increased your city's pop by +1 every turn if you had excess food.
In civ 3 this is not the case. Does anyone know exactly what it does?
I don't have exact info but the manual states that it reduces the effect of corruption (but only on shields) and makes your cities more resistant to propaganda from other nations.
I've found out that this is actually advantageous for your cities that are quite far from your capital.
Grow them to size 6 (min. pop. for the WLTK-day)
Then, instead of letting all inhabitants work squares, put some on entertainment until you trigger the WTK-day. You might actually get 2 shields instead of only 1 because of the effects.
(And it makes a big difference to build your courthouse in 80 or 40 turns to reduce effects even further)
Thanks for the info! Looks like I must have missed that section of the manual. For many of the topics in the manual you have to look in more than one section to get complete information about the topic.