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Democratic reversals and the size of government
Abstract
While the fiscal and redistributive consequences of democracy is one of the central debates in political economy, most empirical studies analyze this question solely in the context of transitions to democracy. In this paper, we explore the consequences to taxation of democratic reversal using the systematic disenfranchisement of African Americans in the US South between 1880 and 1910. Following the federally-imposed extension of the franchise to the former slaves during Reconstruction (1865–1877), Southern states erected a series of legal restrictions, such as literacy tests and poll taxes, aimed primarily at preventing Southern African Americans from registering to vote. Using an original dataset of local and state taxes and a difference-in-differences estimation strategy, we demonstrate that the adoption of literacy tests for voting eligibility in each state was followed by a significant decline in tax revenues that is highly correlated to the share of each county's population who was African American. We also find that black disenfranchisement led to a shift of the tax burden onto urban counties and a greater reliance on indirect taxation. Our results survive a battery of robustness checks, alternative specifications and additional tests of the redistributionist thesis. The findings are not only consistent with standard models of redistribution following democratization, but also indicate that the elasticity of taxes with respect to enfranchisement is substantial and larger than the one suggested by the cross-national literature.
This paper examines how the level of democracy in a country affects the relationship between fiscal decentralization and government size. We argue that political regimes, proxied by their democracy levels, are important for different decentralization theories to predict the impact of fiscal decentralization on government size. We test this argument using panel data from 76 developed and developing countries during 1972–2013. We find strong and robust evidence that fiscal decentralization is negatively associated with government size and that a higher level of democracy tends to mitigate the negative impact of fiscal decentralization. Therefore, our study contributes to the literature by offering a novel insight on mixed results regarding the relationship between fiscal decentralization and government size in the literature.
The Voting Rights Act of 1965, called one of the most effective pieces of civil rights legislation in U.S. history, generated
dramatic increases in black voter registration across the South. We ask whether the increase in black voting rights was accompanied
by an increase in blacks’ share of public spending. We exploit a key provision of the act—removal of literacy tests at registration—for
identification. Employing a triple-difference framework over a 20-year period, we find that counties with higher black population
shares in former literacy test states saw greater increases in both voter turnout and state transfers than comparison counties
in non–literacy test states, a finding that is consistent with models of distributive politics. JEL Codes: D72, H7, I2, J15, N32.
A new rationale is presented for why an elite may want to expand the franchise even in the absence of threats to the established
order. Expanding the franchise can turn politicians away from particularistic politics based on ad personam redistribution
within the elite and foster competition based on programs with diffuse benefits. If these programs are valuable, a majority
of the elite votes in favor of an extension of the franchise despite the absence of a threat from the disenfranchised. We
argue that the evolution of public spending and of political competition in nineteenth century Britain is consistent with
our model.