How Bureaucratic Capacity Shapes Policy Outcomes: Partisan Politics and Affluent Citizens' Incomes in the American States

Daniel Berkowitz

No 6079, Working Paper from Department of Economics, University of Pittsburgh

Abstract: We contend that political institutions require a high level of bureaucratic capacity, as measured by the caliber of agency heads, if they are to have their preferred policy outcomes attained. Moreover, their policy objectives can only be realized when unified partisan majorities both delegate authority and constrain its exercise by administrative institutions. Panel evidence from the American states reveals that during times of unified Republican partisan control of state executive and legislative institutions are associated with higher income gains for affluent citizens, but only when bureaucratic capacity is sufficiently high. However, rising bureaucratic capacity at its lower levels only notably reduces incomes for affluent citizens when unified Democratic party governments hold power in the American states. These findings both highlight the critical role that agency leadership exerts for attaining policy outcomes consistent with democratic preferences, and underscore the limits of electoral institutions to shape policy outcomes of their own accord.

Date: 2017-01
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