Party Control of State Government and the Distribution of Public Expenditures

Abstract

This paper examines the effects of party control of state governments on the distribution of intergovernmental transfers across counties from 1957 to 1997. We find that the governing parties skew the distribution of funds in favor of areas that provide them with the strongest electoral support. This is borne out two ways. (1) Counties that traditionally give the highest vote share to the governing party receive larger shares of state transfers to local governments. (2) When control of the state government changes, the distribution of funds shifts in the direction of the new governing party. We find no evidence that parties reward electorally pivotal counties - counties that are near the median of the state or that have relatively high levels of electoral volatility (high swings). Finally, we find that increased spending in a county increases voter turnout in subsequent elections. This suggests that parties have an electoral incentive to skew the distribution of funds to influence future election results, and the mechanism through which this works is "mobilization" rather than "conversion" of voters in a fixed electorate.

Keywords: Political Economy, Rent-seeking, Political Parties, Intergovernmental Transfers, Voting

JEL Classification: P26, H7, D72