State Income, Employment, Infrastructure and Well-Being: Do Party Control and Political Competition Matter?

This paper examines the relationship between state party politics and the economic performance of the state over six four-year periods covering the years 1978 to 2002. Novel features include that the study examines the role of party control in a panel, it examines the effects of political competitiveness, measures effects not only on income variables but also on employment, tax, and spending policies, infrastructure investment, and quality of life variables. The main finding is that control of the executive branch, the legislative branch, or both branches, has no significant effect on state outcomes, but the degree of political competitiveness in these data reveals significant and usually beneficial effects on employment and on quality of life outcomes. The paper also investigates possible factors that could otherwise mistakenly account for the negative conclusion on party control. We hypothesize that both parties, when in competition for votes, will adopt those economic policies believed to be effective by the politically median voter, regardless of party stereotypes, but that the competition between the parties may provide benefits to the public by forcing politicians to sharpen their policy skills.