Military Governors and Subsidy Spending

Northwestern Law & Econ Research Paper No. 23-15

59 Pages Posted: 3 May 2023 Last revised: 19 May 2024

See all articles by Dhruv Aggarwal

Dhruv Aggarwal

Northwestern Pritzker School of Law

Lubomir P. Litov

University of Oklahoma - Michael F. Price College of Business; University of Pennsylvania - Wharton Financial Institutions Center

Date Written: April 6, 2023

Abstract

Using a hand-coded dataset tracking the backgrounds of U.S. governors between 1993 and 2021, we argue that officeholders with military experience are less likely to engage in wasteful spending on corporate subsidies. Military governors are less likely to increase subsidies to corporations when they become “lame ducks” (i.e., ineligible to run for another term). We also find evidence that military governors are less likely to engage in political cronyism: they are less likely to favor companies with the same political affiliation during their lame duck phase. Given the exogenous constitutional variation in term limits between states and governors, these effects are credibly causal. Electoral incentives and the personal characteristics of officeholders thus influence firm-state relations.

Keywords: Subsidies, Firm-State Relations, Military Veterans, Governors, Federalism

JEL Classification: G32, G38, D73, K23, K42

Suggested Citation

Aggarwal, Dhruv and Litov, Lubomir P., Military Governors and Subsidy Spending (April 6, 2023). Northwestern Law & Econ Research Paper No. 23-15, Available at SSRN: https://ssrn.com/abstract=4411224 or http://dx.doi.org/10.2139/ssrn.4411224

Dhruv Aggarwal (Contact Author)

Northwestern Pritzker School of Law ( email )

750 N. Lake Shore Drive
Chicago, IL 60611
United States

Lubomir P. Litov

University of Oklahoma - Michael F. Price College of Business ( email )

307 West Brooks
Norman, OK 73019-4004
United States

University of Pennsylvania - Wharton Financial Institutions Center

2306 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
United States

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