Three essays on political economy

Abstract

Essay 1: Allies and Adversaries: The Roles of Appointees in Administrative Policymaking under Separation of Powers. In a system of divided power, public sector agencies are an important front in the day-to-day battle for political supremacy between the executive and the legislature. The executive's key agents in this conflict are his appointees, who are observed playing two broad roles: allies, where they work to help Congress implement policy and adversaries, where they fight with Congress to shift policy strongly in the executive's direction. This paper studies how these two roles arise and what implications they have for the interaction of Congress and the executive, in administrative policymaking. Thereby, it highlights how intrinsically motivated bureaucrats combined with hierarchical control affect the ability of the political principals to control the execution of policy. Furthermore, I explore how this interaction shifts under alternative institutional forms, and how it leads appointees to "marry the natives." The model makes several predictions concerning Congressional oversight of bureaucratic agencies. These predictions are broadly supported by an empirical analysis of audit reports released by the Government Accountability Office. Essay 2: State Parties and State Policies: A Double Regression Discontinuity Approach. This paper identifies the causal effect of partisan power on tax and labor policies in the context of U.S. state legislatures from 1970 to 2000. Using a two dimensional regression discontinuity design, I identify the effect of Democratic control of the state legislature, as compared to divided control or Republican control, on tax burden and the state minimum wage.

(cont.) Using a novel instrumental variables approach, where the instrument is derived from the outcome of close legislative election, I also identify the effect of a marginal shift in the share of Democrats in the legislature on these same policies. To my knowledge this is the first paper to cleanly identify these pure partisan effects. In contrast to its prominence in popular discussions, the resulting estimates for control are quite small, suggesting that the pure partisan effect of control is relatively unimportant in understanding changes in these fiscal and labor policies. The estimates for party mix, however, are larger, suggesting this may be the more important channel by which party affects policy in this setting. Essay 3: Third-Party Auditors and Political Accountability. The most important tool that citizens have to police the decisions of their elected representatives is the ballot box. But the effectiveness of this tool depends crucially on the citizens' ability to correctly judge whether the politicians they select are doing their best to act in the interests of their constituents. This paper asks when and how specialist third-party auditors, people whose incentives come from outside the particular citizen-politician relationship under consideration, can nonetheless improve the ballot box as a tool of political accountability. I will look at three sorts of auditors: journalist, bureaucrat, and the opposition party, and show that because of the way that they respond to career-concern incentives, by auditing asymmetrically, auditors with incentives similar to journalists are particularly well suited to this role.