Political Parties Do Matter in U.S. Cities... For Their Unfunded Pensions

Christian Dippel

No 25601, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the biggest fiscal challenge currently facing many U.S. cities, namely public-sector pension obligations. Employing a regression discontinuity design (RDD), it tests whether the mayor’s party impacts a city’s public-sector pensions. Pension benefits are shown to grow faster under Democratic-party mayors, while contribution payments simultaneously fall behind. Previous research showed that parties do not matter in U.S. cities for a wide range of fiscal expenditure types, purportedly because voters impose fiscal discipline. This paper shows that parties can matter when expenditures benefit a narrow interest group and are difficult to observe for tax payers.

JEL-codes: D72 D73 H7 H75 J5 (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-age, nep-his and nep-ure
Note: AG LE PE POL
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Citations: View citations in EconPapers (4)

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