What's the Difference between a Donkey and an Elephant? Using Panel Data from Us States to Estimate the Impact of Partisanship on Policy Settings and Economic Outcomes

The Australian National University Centre for Economic Policy Research Discussion Paper No. 504

26 Pages Posted: 16 Jul 2005

See all articles by Andrew Leigh

Andrew Leigh

Australian House of Representatives Parliament House; Centre for Applied Macroeconomic Analysis, ANU; IZA

Date Written: June 2005

Abstract

Using panel data from US states over the period 1963-2002, I measure the impact of partisanship on a wide range of different policy settings and economic outcomes. Across 32 measures, there are surprisingly few differences in policy settings, social outcomes and economic outcomes under Democrats and Republicans. In terms of policies, Democratic Governors tend to prefer slightly higher minimum wages and more redistributive taxes. Under Republican Governors, incarceration rates are higher, while welfare caseloads are higher under Democratic Governors. In terms of social and economic outcomes, Democratic Governors tend to preside over higher median post-tax income, lower post-tax inequality, and lower unemployment rates. However, for 25 of the 32 dependent variables, gubernatorial partisanship does not have a statistically significant impact on policy outcomes and social welfare. I find no evidence of gubernatorial partisan differences in welfare generosity, the number of government employees or their salaries, state revenue, incarceration rates, execution rates, pre-tax incomes and inequality, crime rates, suicide rates, and test scores. These results are robust to the use of regression discontinuity estimation, to take account of the possibility of reverse causality. Overall, it seems that Governors behave in a fairly non-ideological manner.

Keywords: Median voter theorem, partisanship, state government, taxation, expenditure, welfare, crime, growth

JEL Classification: D72, D78, H71, H72, I38

Suggested Citation

Leigh, Andrew, What's the Difference between a Donkey and an Elephant? Using Panel Data from Us States to Estimate the Impact of Partisanship on Policy Settings and Economic Outcomes (June 2005). The Australian National University Centre for Economic Policy Research Discussion Paper No. 504, Available at SSRN: https://ssrn.com/abstract=756625 or http://dx.doi.org/10.2139/ssrn.756625

Andrew Leigh (Contact Author)

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Centre for Applied Macroeconomic Analysis, ANU ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

IZA ( email )

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