the glass ceiling in politics formalization and empirical tests there is a scarcity of women at the apex of political power as well as a lack of methods to disentangle the potential sources of this under representation this article suggests a four step method to test for whether women s under representation can be explained by the existence of a glass ceiling we emphasize that this concept implies discrimination in promotions within the political organization that the discriminatory promotions increase in severity at the top levels of power and that they increase in severity during an individual s career trajectory the proposed method is applied to subnational politics in sweden a long standing world leader in women s descriptive representation the results support the conjecture that a glass ceiling is hindering elected women s rise to political power in this context

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

politicians outside earnings and electoral competition this paper deals with the impact of electoral competition on politicians outside earnings in our framework politicians face a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings the main hypothesis is that the amount of time spent on outside work is negatively related to the degree of electoral competition we test this hypothesis using a new dataset on outside earnings of members of the german federal assembly and find that politicians facing low competition have substantially higher outside earnings

transparency and economic policy we provide a two period model of political competition in which voters imperfectly observe the electoral promises made to other voters imperfect observability generates an incentive for candidates to offer excessive transfers even if voters are homogeneous and taxation is distortionary government spending is larger than in a world of perfect observability transfers are partly financed through government debt and the size of the debt is higher in less transparent political systems the model provides an explanation of fiscal churning it also predicts that groups whose transfers are less visible to others receive higher transfers and that imperfect transparency of transfers may lead to underprovision of public goods from the policy perspective the main novelty of our analysis is a separate evaluation of the transparency of spending and the transparency of revenues we show that the transparency of the political system does not unambiguously improve efficiency transparency of spending is beneficial but transparency of revenues can be counterproductive because it endogenously leads to increased wasteful spending

rewards to investors in innovative information technology applications first movers and early followers in atms innovative information technology it applications are risky investments unless successful applications provide innovators with exceptional returns these investments would not be justified other than a few case studies there is no evidence that the first movers of successful it applications are rewarded for the risks they bear we present the results of an extensive longitudinal study of the effects of early adoption of automated teller machines atms by banks on market share and income the study spans the period from 1971 to 1983 and includes 2 534 banks from across the united states results indicate that the earliest adopters 1971 through 1973 were able to increase market share with market share gains being sustained for a long time banks that adopted atms between 1974 and 1979 however did not gain market share the results also indicate that early atm adoption enabled banks to increase income and income gains were sustained for a long time these findings support case study evidence that early adoption of new it applications can lead to long term competitive advantages for firms

specifying the dynamics of industry concentration previous studies generally explain changes in concentration by its initial determinants or by changes in its determinants little attention is paid to the dynamic structure of the model this study provides a framework to sort out adjustment effects in a systematic manner the empirical model distinguishes long term from short term effects and estimates the rate of adjustment when concentration deviates from its long term equilibrium level considerable attention has focused on industry concentration as a key element of market structure while earlier empirical studies examined determinants of the level of industry concentration a more recent literature focuses on changes in concentration these more recent papers typically explain intertemporal changes in concentration by the past levels of industry growth concentration advertising intensity and minimum efficient plant size however the dynamic relationship between changes in concentration and the levels of the independent variables has not been explicitly specified caves and porter 1980 have argued that explaining changes in concentration by past levels of market structure variables is tantamount to assuming that the sampled industries are in the process of adjusting to a disequilibrium situation as an alternative they adopt a long term equilibrium approach whereby changes in concentration are explained by lagged changes in the relevant market conditions they find that this approach as a whole was unsuccessful exhibiting low levels of significance and a lack of robustness when the cross section regressions were shifted to different time periods

job choice in academia the asymmetric international mobility of talented scientists is well documented yet there is little evidence about the reasons why scientists choose particular jobs building on an extended human capital model of science we unify a dispersed literature relevant for job choice to formulate hypotheses which we test in a unique international quasi experiment among more than 10 000 researchers we find that attractive jobs satisfy researchers taste for science and increase their expected scientific productivity responding to both intrinsic and extrinsic motivations in particular while salaries research funding and working with stimulating peers matter we provide unique estimates of the importance of organisational and institutional factors early stage researchers are willing to trade off a substantial amount of salary for early independence and tenure perspectives later stage researchers favour jobs which make it easy to take up new lines of research research only positions are considered as less attractive than jobs with a moderate amount of teaching our findings have important implications for the organisational design of research universities and the competitiveness of european science in light of the brain drain of highly talented scientists towards the u s

political competition and politician quality evidence from italian municipalities we use data from italian local level governments for the years 1985 2008 to investigate whether political competition affects the quality of politicians as measured by some ex ante characteristics such as educational level and type of job held we handle endogeneity problems through an instrumental variable approach using as an instrument for political competition a variable taking into account whether the previous municipal council survived until the end of its legislative term two stage least square estimates support the view that political competition positively affects politician quality results are robust to different measures of political competition and to different estimation strategies

capital budgets borrowing rules and state capital spending abstract this paper compares the level and composition of government spending in u s states that maintain separate budgets for capital and operating expenditures with that in states that employ unified budgets it also investigates the effects of pay as you go financing rules for capital projects the empirical findings suggest that states with separate capital budgets spend more on public capital projects than comparable states with unified budgets there is no evidence that the presence or absence of a capital budget affects the level of non capital spending pay as you go requirements for financing capital projects are associated with lower levels of both capital and non capital spending

state responses to fiscal crises the effects of budgetary institutions and politics this paper explores the dynamics of state taxes and spending during the late 1980s when regional economic downturns and increased expenditure demands led to substantial state budget deficits more restrictive state fiscal institutions such as no deficit carryover rules and tax and expenditure limitations are correlated with more rapid fiscal adjustment to unexpected deficits political factors are also important when a single party controls the state house and the governorship deficit adjustment is much faster than when party control is divided in gubernatorial election years tax increases and spending cuts are both significantly smaller than at other times

the impact of federal incentives on the adoption of hybrid electric vehicles in the united states abstract starting in 2004 the federal government in the united states offered several nationwide incentives to consumers to increase the adoption of hybrid electric vehicles this study assesses the effectiveness of the energy policy act of 2005 in this regard using econometric methods and data between 2000 and 2010 our model accounts for network externalities by using lagged sales as an independent variable this approach helps to capture the exponential initial growth associated with the diffusion of new technologies and avoids overestimating the effect of the policy incentives our results show that the energy policy act of 2005 increased the sales of hybrids from 3 to 20 depending on the vehicle model considered in addition we find that this incentive is only effective when the amount provided is sufficiently large

do economics departments with lower tenure probabilities pay higher faculty salaries the simplest competitive labor market model asserts that if tenure is a desirable job characteristic for professors they should be willing to pay for it by accepting lower salaries conversely if an institution unilaterally reduces the probability that its assistant professors receive tenure it will have to pay higher salaries to attract new faculty our paper tests this theory using data on salary offers accepted by new assistant professors at economics departments in the united states during the 1974 75 to 1980 81 period along with data on the proportion of new ph d s hired by each department between 1970 and 1980 that received tenure in the department or at a comparable or higher quality department within the first eight years of receipt of their ph d s we find evidence that supports the hypothesis that a tradeoff existed equally importantly departments that offered low tenure probabilities to assistant professors also paid higher salaries to their tenured faculty we attribute this to low tenur

why voters vote for incumbents but against incumbency a rational choice explanation in recent elections voters supported initiatives to limit the number of terms that their representatives may serve yet at the same time overwhelmingly re elected their incumbents we provide a theoretical explanation for this and other puzzles associated with voting on term limitations the pattern of voting on term limits can be explained by the desire to redistribute power from one party to another from one branch of government to another and from districts with long term incumbents to districts whose representatives have served only for a short time span we test these hypotheses by looking at voting patters on california proposition 140 and the vote on the 22nd amendment with generally positive results

excess bias and the nature of budget growth abstract to examine the hypothesis that budget growth has been excessive the concept of correct budget size must first be defined this proves a difficult task for the level of public services but especially so regarding redistribution and transfer payments next potential sources of bias are explored including distortions in voting bureaucracy and political leadership analysis shows that bias may be in either direction making for deficient as well as excess budgets institutional reform therefore should not prejudge the outcome by imposing limitations the goal should be to improve the budget process however this may affect budget size

academic tenure posttenure effort and contractual damages i introduction in this article we explore the incentive properties of academic tenure relative to alternatives that might be substitutes for tenure we do not present a comprehensive theory of academic tenure but rather emphasize the role of tenure in providing an incentive for incumbent faculty to reveal the characteristics of recruits and to maintain their own posttenure performance academic tenure often implies that its holder cannot be removed from post except for good cause usually based on gross moral turpitude or gross incompetence mcpherson and schapiro 1999 such removal is historically characterized by a costly procedure governed by organizational or state statutes tepker 1993 our results suggest that tenure is just one of many mechanisms able to achieve honest revelation and that it has important interactions with other mechanisms there is no question that tenure is a constraint to administrators and limits the discretion of university managers the objective of our article is not to provide a new explanation for academic tenure but to show how tenure could in principle be replaced by contractual damages and how it more generally interacts with damages we believe it is worth theoretically exploring alternatives to tenure because universities appear to ignore tenure statutes on occasions in particular it is now common for schools to ignore orders to reinstate dismissed apparently tenured faculty and to choose to pay damages instead tepker 1993 carmichael s 1988 model suggests that damages can achieve efficient information revelation where the value of academics next best occupations are known a damages payment equal to the difference between current expected earnings and next best earnings that is restoring the victim s expectations ignoring nonpecuniary benefits for simplicity will then make an incumbent indifferent between remaining and being sacked and happy to reveal the skills of entrants carmichael rules out the payment of expectation damages and concentrates on the use of tenure which creates a requirement for specific performance by the university we contend that the frequent award of expectation damages by courts faced with cases of refusal to reinstate suggests that more attention should be given to the damages option 1 and indeed to possible interactions between tenure and its alternatives our contention is reinforced by the observation that many universities are currently softening tenure by introducing devices like five yearly reviews for tenured faculty note also that the role of tenure looms large once it has been awarded directing our attention toward a model of posttenure performance particularly if it could be lost possibly subject to the payment of contract damages our model explores the role of contractual damages in replacing academic tenure i e reinstatement as well as addressing the problem of revelation we depart from previous literature in considering that it is now common practice for university departments to use rankings and publication records to evaluate faculty thus reducing the asymmetry of information with respect to research and productivity detected by carmichael 1988 p 460 we focus on posttenure performance in the shadow of the threat of dismissal followed by payment of contract damages dnes and seaton 1998 2001 examine the reform of academic tenure in the united kingdom by the 1988 education reform act which allowed softer tenure to be chosen by universities 2 the authors tested the hypothesis that softening tenure encourages incumbent academics to consolidate their hold on academic life it seems that after 1988 the distinction between hard tenure and soft tenure universities persisted that is many british universities chose to continue operating a hard tenure system allowing softer tenure has not hindered the improvement of academic performance in the context of increased pressures from a research quality exercise that is periodically carried out by the higher education funding council

how does incompatibility affect prices evidence from atm s if consumers value mix and match combinations of network complements incompatibility between different sellers components should affect prices in atm markets a 1996 governance change exogenously generated such incompatibility by allowing banks to impose surcharges when other banks deposit customers use their atm s in our data incompatibility makes the relationship between deposit account pricing and own atm s more positive and makes the relationship between deposit account pricing and competitors atm s more negative the level effect on prices is positive the pattern of results is more pronounced in high population density markets where customers may care more about atm s

competition in the political arena and local government performance competition reduces rent extraction in private sector firms in this article we empirically assess whether it similarly disciplines politicians by evaluating local level governments performance in flanders the results indicate that electoral competition measured via the number of parties competing in elections significantly positively affects the productive efficiency of municipal policy intertemporal competition measured as the volatility of election outcomes over time has a similar but weaker positive effect these beneficial effects are mitigated by the fact that competition may lead to more fragmented governments which is shown to work against their productive efficiency overall though the beneficial effects outweigh the unfavourable ones in our sample

does electoral accountability affect economic policy choices evidence from gubernatorial term limits this paper analyzes the behavior of u s governors from 1950 to 1986 to investigate a reputation building model of political behavior we argue that differences in the behavior of governors who face a binding term limit and those who are able to run again provides a source of variation in discount rates that can be used to test a political agency model we find evidence that taxes spending and other policy instruments respond to a binding term limit if a democrat is in office the result is a fiscal cycle in term limit states which lowers state income when the term limit binds

divided government fiscal institutions and budget deficits evidence from the states does partisan control of american state government have systematic effects on state spending and taxing levels does divided control affect the government s ability to make hard decisions do institutional rules like legal deficit carryover restrictions matter using a formal model of fiscal policy to guide empirical analysis of data covering the american states from 1968 to 1987 we conclude that 1 aggregate state budget totals are driven by different factors under democrats and republicans the net result being that democrats target spending and taxes to higher shares of state level personal income 2 divided government is less able to react to revenue shocks that lead to budget deficits particularly where different parties control each chamber of the legislature and 3 unified party governments with restricted ability to carry deficits into the next fiscal year outside the south have sharper reactions to negative revenue shocks than those without restrictions

the political process and the use of debt financing by state governments empirical evidence offered in this study suggests that decisions by state government officials to effect debt financed spending depend in part on the state s gubernatorial election cycle more specifically the results reveal relative increases in state debt issues in anticipation of elections and furthermore they reveal that such increases are more significant for states characterized by high interparty political competition while theoretical limitations preclude a definitive explanation for these results the evidence is consistent with a view of state political markets where incumbent parties manipulate public policy so as to enhance the probability of success in pending elections this insight is significant in that it suggests a relationship between public policy decisions and election cycles in a context heretofore unexplored

budget spillovers and fiscal policy interdependence evidence from the states abstract this paper formalizes and tests the notion that states expenditures depend on the spending of similarly situated states we find that even after allowing for fixed state effects year effects and common random shocks among neighbors a state government s level of per capita expenditure is positively and significantly affected by the expenditure levels of its neighbors ceteris paribus a one dollar increase in a state s neighbors expenditures increases its own expenditure by over 70 cents

the causes of government expenditure growth a survey of the u s evidence abstract the growth of government budgets can be broken down into a institutional and institutional components the former component the familiar substitution income and population public goods tax sharing effects is estimated to contribute about two fifths of the growth of u s government spending the latter component rent seeking political redistributions bureaucracy and perceptual informational impedimentia is important too but an exact imputation cannot be asserted given the state of the art in empirical public choice theory the cross effects on spending of the growth of regulation and tax preferences or tax expenditures though interesting is not pursued

paying politicians theory and evidence this paper looks at the theory behind the idea that paying politicians better will improve their performance the paper lays out a political agency model with adverse selection and moral hazard where politicians are subject to two period term limits this model provides a number of predictions about how the pay of politicians affects agency problems we also consider what happens when the pool of politicians is endogenous the main ideas in the model are confronted with data on u s governors jel d72 j33

political competition and state government size do tighter elections produce looser budgets we test implications of politicalcompetition theory concerning government size usingdata from u s states we find that greaterpolitical competition in the race for governor actsas a check against bigger government evidence onthe effectiveness of legal limits on expendituresand or revenues growth is mixed the democraticparty is associated with bigger government but onlywhen party representation in both the governor shouse and the legislature is strong the flypapereffect of grants is found to be strong our resultshave implications for models of fiscal illusion

strategic incompatibility in atm markets abstract we test whether firms use incompatibility strategically using data from atm markets high atm fees degrade the value of competitors deposit accounts and can in principle serve as a mechanism for siphoning depositors away from competitors or for creating deposit account differentiation our empirical framework can empirically distinguish surcharging motivated by this strategic concern from surcharging that simply maximizes atm profit considered as a stand alone operation the results are consistent with such behavior by large banks but not by small banks for large banks the effect of incompatibility seems to operate through higher deposit account fees rather than increased deposit account base

political competition policy and growth theory and evidence from the us this paper develops a simple model to analyse how a lack of political competition may lead to policies that hinder economic growth we test the predictions of the model on panel data for the us states in these data we find robust evidence that lack of political competition in a state is associated with anti growth policies higher taxes lower capital spending and a reduced likelihood of using right to work laws we also document a strong link between low political competition and low income growth

organised crime institutions and political quality empirical evidence from italian municipalities this article assesses how legal institutions affect the influence of politically active criminal organisations on the human capital of elected politicians using data from over 1 500 southern italian municipalities in the period 1985 2011 it exploits municipal government dissolutions imposed by the national government for presumed mafia infiltration as a source of exogenous variation in the presence of politically active criminal organisations the results support theoretical predictions that the average education level of local politicians significantly increases when active mafia infiltration of local politics is remedied through the implementation of a stricter legal institutional framework

the impact of technology adoption on market structure this paper examines the impact of bank adoptions of automated teller machines atms on subsequent levels of concentration in local banking markets the findings suggest that banks have had some success in using atms to attract customers from competitors as a consequence technology adoption s impact on market structure depends upon whether it is the larger or smaller firms within the market that adopt the new technology large firm adoptions increase concentration levels while small firm adoptions tend to reduce them the evidence also suggest that a state of structural disequilibrium seems to be characteristic of banking markets copyright 1990 by mit press

subsidies hierarchy and peers the awkward economics of higher education higher education is a business it produces and sells educational services to customers for a price and it buys inputs with which to make that product production is subject to technological constraints costs and revenues discipline decisions and determine the long run viability of a college or university but higher education is not just a business while that statement is often meant to imply that higher education is nobler than business more decent and humane in the purposes it serves it can also mean that even in economic terms higher education is in important ways simply different from a business this paper asks how well our extensive experience with commercial businesses and the microeconomic theory of firms and markets that has evolved to describe them helps in understanding the economics of higher education that experience and those insights will be used by trustees politicians administrators lawyers reporters and the public as well as by economists to understand and evaluate the behavior of colleges and universities so it is useful to ask how safe it is to use the economic analogy in the context of higher education drawing parallels between universities and firms students and customers faculty and labor markets and so on the discussion here seeks to identify the key economic features of higher education that make it different from familiar for profit industries and to ask what difference those differences make this is a stick that can be picked up from either end one approach is to start with meticulous economic theory and see how far it can be made to encompass the economic realities of higher education an excellent recent paper by rothschild and white 1995 does that in their matching model students and colleges meet

the effects of party competition on budget outcomes empirical evidence from local governments in spain this paper investigates the link between local budget outcomes and the intensity of party competition measured as the margin of victory obtained by the incumbent in the previous local election i e the difference between the vote share and 50 two competing hypotheses are tested in the paper on the one hand the leviathan government hypothesis suggests that the lower the intensity of party competition is the greater is the increase in the size of the local public sector irrespective of the ideology of the party in power on the other hand the partisan government hypothesis suggests that the incumbent will find it easier to advance its platform when intensity of competition is low i e parties on the left right will increase decrease the size of the local public sector when the intensity of the challenge from the opposition is low these hypotheses are tested with information on spending own revenues and deficit for more than 500 spanish local governments over 8 years 1992 1999 and information on the results of two local electoral contests 1991 and 1995 the evidence favors the partisan hypothesis over the leviathan one we found that for left wing governments spending taxes and deficits increased as the electoral margin increases whereas for right wing governments a greater margin of victory led to reductions in all these variables

the economics of academic tenure a relational perspective abstract this analysis draws on recent work in analytical labor economics that shows the value of stable long term employment relationships tenure is conventionally portrayed as an economically wasteful institution justified if at all by its non economic value the present analysis identifies ways in which an extended probationary period followed by a lifetime guarantee of a well defined job is well adapted to features of academic work the most important of these are a the difficulty of monitoring faculty work performance and the highly specific character of b faculty jobs and c the training those jobs require the probation tenure system is contrasted with term contracting case studies support the theoretical inferences about the drawbacks of term contracting in an academic setting

electoral competition and political selection an analysis of the activity of french deputies 1958 2012 abstract in this paper we study the relation between electoral competition and political selection using a unique dataset containing detailed yearly information about members of the french national assembly from 1958 to 2012 first we innovate by proposing a measure of deputy activity to obtain insight into political selection as we gathered information on the many aspects of deputies individual work we use a nonparametric composite indicator of deputy activity that fully acknowledges the multidimensional nature of parliamentary work we argue that this measure of activity is positively correlated with competence and intrinsic motivation two components of politicians quality second we exploit the large time span of our dataset to study the evolution of the relationship between electoral competition and political selection over time overall our results show that deputies elected in a priori contested districts have a higher overall activity with the intensity of this relationship reaching its peak in the 80 s but constantly decreasing since then

the importance of lifetime jobs in the u s economy though the u s labor market is justly notorious for high turnover and consequent high unemployment it also provides stable near lifetime employment to an important fraction of the labor force this paper investigates patterns of job duration by age race and sex with the following major conclusions 1 the typical worker today is holding a job which has lasted or will last about eight years over a quarter of all workers are holding jobs which will last twenty years or more sixty percent hold jobs which will last five years or more 2 the jobs held by middle aged workers with more than ten years of tenure are extremely stable over the span of a decade only twenty to thirty percent come to an end 3 among workers aged thirty and above about forty percent are currently working in jobs which eventually will last twenty years or more three quarters are in jobs which will last five years or more 4 the duration of employment among blacks is just as long as among whites even though the jobs held by blacks are worse in almost every other dimension they are no more unstable than those held by whites 5 women s jobs are substantially shorter than men s on the average only about a quarter of all women over the age of thirty are employed in jobs which will last over twenty years whereas over half of men over thirty are holding these near lifetime jobs this abstract was borrowed from another version of this item

incumbent behavior vote seeking tax setting and yardstick competition this paper develops a model of the political economy of tax setting in a multijurisdictional world where voters choices and incumbent behavior are determined simultaneously voters are assumed to make comparisons between jurisdictions to overcome political agency problems this forces incumbents into a yardstick competition in which they care about what other incumbents are doing we provide a theoretical framework and empirical evidence using u s state data from 1960 to 1988 the results are encouraging to the view that vote seeking and tax setting are tied together through the nexus of yardstick competition

the primary effect preference votes and political promotions we analyze how electoral rules and outcomes shape the internal organization of political parties theoretically we make an analogy with primary elections to argue that parties use preference vote tallies to identify popular politicians and promote them to positions of power empirically we document this behavior among parties in sweden s semi open list system and in brazil s open list system to identify a causal impact of preference votes we exploit a regression discontinuity design around the threshold of winning the most preference votes on a party list in our main case sweden these narrow primary winners are at least 50 more likely to become local party leaders than their runners up across individual politicians the primary effect is present only for politicians who hold the first few positions on the list and when the preference vote winner and runner up have similar competence levels across party groups the primary effect is the strongest in unthreatened governing parties

do institutions affect citizens selection into politics traditional political economy has paid primary attention to the structuring of the principal agent relationship between citizens and politicians and the role of competition and institutions in disciplining political agents however as the electoral control of politicians and the credibility of policy commitments are limited this perspective needs to be complemented with an economics of political selection that takes into account the quality of those elected to political office we review the emerging literature which investigates institutional conditions that impact the selection of politicians we discuss pay in politics electoral rules institutions enhancing transparency in politics and institutions which govern dual office holding in different branches of government we argue that further comparative analyses are essential in order to gain an improved understanding of the impact that institutions have on political outcomes not only via the channel of accountability but also via the channel of selection

electoral bias and policy choice theory and evidence this paper develops an approach to studying how bias in favor of one party due to the pattern of electoral districting affects policy choice we tie a commonly used measure of electoral bias to the theory of party competition and show how this affects party strategy in theory the usefulness of the approach is illustrated using data on local government in england the results suggest that reducing electoral bias leads parties to moderate their policies

tenure issues in higher education the system of tenure that dominates american higher education has long been a source of controversy the institution of tenure has been attacked for entrenching a lazy professoriate more interested in attending faraway conferences and producing unreadable research than in teaching or developing practical insights while on the other hand it has long been defended as an absolute necessity for the defense of open intellectual inquiry the tenure controversy has been sharpened in recent years by several events the end of mandatory retirement which was abolished by federal law effective january 1 1994 has heightened concerns about the productivity and commitment of professors who received tenure long ago and who no longer have the same incentives to invest in long term reputation there is also ongoing concern over the steadily rising cost of higher education which raises the question of what students as well as the taxpayers who support public institutions of higher education are getting for their money 1 the idea that tenure is a wasteful institution for universities runs up against the puzzling fact that the commitment to tenure is one that academic institutions impose on themselves although the american association of university professors aaup provides a powerful lobby in favor of tenure generally colleges and universities most notably private ones are under no legal requirement to observe tenure constraints although as administrators we certainly feel the weight of those constraints our view is that a tenure system in fact provides important benefits to society and to colleges and universities we argue here that the role of tenure is

interest groups and the size of government the results of the previous section estimates of a three equation model from 23 observations must obviously be regarded as tentative the consistent positive relationship between number of interest groups and size of government observed with changing sets of included independent variables changing samples of nations and treating the number of interest groups as either exogenous or codetermined does imply rather unequivocally that interest groups are able to influence public policies in such a manner as to lead to increased government size beyond helping to reinforce this conclusion the results of the previous section should be regarded as first steps in the development of a model of the polity that can explain participation in the political process by interest groups and citizens as well as the size of government

searching for leviathan an empirical study in several papers and a recent book geoffrey brennan and james buchanan 1977 1978 1980 have put forth a striking and controversial view of the public sector drawing by analogy on the conventional theory of monopoly in the private sector they envision a monolithic government that systematically seeks to exploit its citizenry through the maximization of the tax revenues that it extracts from the economy from this perspective they develop a fiscal constitution whose central purpose is to constrain leviathan by limiting in various ways its access to tax and other fiscal instruments while the leviathan hypothesis has been the source of lively debate and a wide range of policy proposals it has not been the subject of much systematic empirical work or testing this is a matter of some importance since the policy implications of the leviathan view are disturbing to put it mildly in particular brennan and buchanan virtually stand on their heads many of the basic theorems in public finance for an efficient and equitable tax system if in fact the leviathan view is an inaccurate depiction of the functioning of the public sector the introduction of their policy proposals is likely to make a sorry mess of the fiscal system the leviathan model does however have some straightforward implications for observable fiscal behavior it is the purpose of this paper to examine one of these testable implications brennan and buchanan stress that fiscal decentralization is itself a powerful constraint on leviathan competition among governments in the context of the interjurisdictional mobility of persons in pursuit of fiscal gains can offer partial or possibly complete substitutes for explicit fiscal constraints on the taxing power 1980 p 184 such competition among governments in a federal system that places heavy reliance on local fiscal decisions will greatly limit the capacity of leviathan to channel resources into the public sector in short as indicated by the epigraph to this paper the leviathan model implies that other things equal the size of the public sector should vary inversely with the extent of fiscal decentralization 2