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Seniority, Term Limits, and Government Spending: Theory and Evidence from the United States

Author

Listed:
  • Yasushi Asako

    (Waseda University (E-mail: yasushi.asako@aoni.waseda.jp))

  • Tetsuya Matsubayashi

    (University of North Texas (E-mail: tmatsubayashi@unt.edu))

  • Michiko Ueda

    (Syracuse University (E-mail: miueda@syracuse.edu))

Abstract

What are the fiscal consequences of legislative term limits? To answer this question, we first study how the average seniority of a legislature affects government spending. We develop a legislative bargaining model that predicts a U-shaped relationship between average seniority and spending: the amount of government spending decreases as the average seniority of the legislature increases from low to moderate, while it increases as the average seniority increases from moderate to high. Our model also predicts that the equilibrium level of seniority is moderate. Building on these predictions, we hypothesize that the adoption of term limits resulting in a small reduction in average seniority in the legislature has little impact on government expenditures because average seniority remains moderate. In contrast, the adoption of term limits that dramatically reduces average seniority of the legislature will increase the amount of government spending because average seniority changes from moderate to low. We test the predicted relationship between seniority, term limits, and government spending using panel data for US state legislatures between 1980 and 2004.

Suggested Citation

  • Yasushi Asako & Tetsuya Matsubayashi & Michiko Ueda, 2012. "Seniority, Term Limits, and Government Spending: Theory and Evidence from the United States," IMES Discussion Paper Series 12-E-05, Institute for Monetary and Economic Studies, Bank of Japan.
  • Handle: RePEc:ime:imedps:12-e-05
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    File URL: http://www.imes.boj.or.jp/research/papers/english/12-E-05.pdf
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    References listed on IDEAS

    as
    1. Timothy Besley & Anne Case, 1995. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 769-798.
    2. John A. List & Daniel M. Sturm, 2006. "How Elections Matter: Theory and Evidence from Environmental Policy," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1249-1281.
    3. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    4. Joseph M. Johnson & W. Mark Crain, 2004. "Effects of Term Limits on Fiscal Performance: Evidence from Democratic Nations," Public Choice, Springer, vol. 119(1_2), pages 73-90, April.
    5. Dalle Nogare, Chiara & Ricciuti, Roberto, 2011. "Do term limits affect fiscal policy choices?," European Journal of Political Economy, Elsevier, vol. 27(4), pages 681-692.
    6. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
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    More about this item

    Keywords

    Legislative Term Limits; Seniority; Legislative Bargaining; Fiscal Spending;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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