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Public Choice

Erschienen in:

08.03.2019

The effects of decentralization on special interest groups

verfasst von: Robert F. Salvino, Gregory M. Randolph, Geoffrey K. Turnbull, Michael T. Tasto

Erschienen in: Public Choice | Ausgabe 3-4/2019

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Abstract

It is well established in the literature that the number of interest group organizations varies across countries and states, with economic freedom and other institutional factors playing important roles in economic growth and prosperity. At the same time, the literature offers little empirical evidence of the influence of institutions on interest group behavior. This study presents new evidence on the extent to which institutional structure, in particular state and local governmental fiscal decentralization, promotes or hinders interest group formation. Expenditure decentralization, more so than revenue decentralization, appears to constrain the number of industry-type groups while having little effect on social-type groups in US states. The results provide further evidence of the importance of institutional quality and structure across states and suggest important directions for future research.

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Interest groups are categorized as industry-type groups if the focus of the group is a narrow business interest. The industry-type groups include interest groups in communications, manufacturing, health, law, banking, business services, small business, agriculture, utilities, transportation, natural resources, construction, and hotels. Groups with a broader focus on social issues are categorized as social-type groups. The social-type groups are civil rights, environment, education, good government, religious, tax, welfare, and women groups.

The empirical evidence on this point is limited and inconclusive. For example, Turnbull et al. (2017) report mixed evidence regarding how the structure of the state and local public sector affects private job growth in US states. Miller et al. (1984) examine centralized regulatory review and argue that it should increase the returns to lobbying for diffuse groups, while having no measurable impact on the returns to concentrated groups. In the present study, we are concerned with fiscal decentralization’s effect on the number of registered interest group organizations. The interplay between decentralization of taxing and expenditures along with regulatory administration is an interesting question, but it is a question that we do not address. We are thankful to the editors for calling this limitation to our attention.

Boehmke (2002) does not provide a list of states or whether or not local government initiatives are considered; he does cite Gerber (1996). A review of Gerber (1996) suggests that their work focuses exclusively on state-level initiatives.

The sample includes all of the contiguous continental US states except Virginia, which is excluded because the pervasive independent city-county relationship is unique to that state (Turnbull and Tasto 2008).

Shughart et al. (2003) present another possibility concerning the direction of causality running from interest groups to income and/or the distribution of income. They model inequality in the income distribution as a function of interest group activity and other factors. They use Gini coefficients to measure income inequality.

For a different view of the relationship between income and decentralization in poorer and/or southern states, see Cavusoglu and Dincer’s (2015) panel analysis of decentralization and income inequality.

Including EXP Decentralization in the models effectively holds the share of spending at the local level constant. A larger number of governments therefore implies that each is smaller, on average.

An earlier footnote provided the rationale for the two types of groups. Examples are repeated here for convenience. The industry-type groups include interest groups in communications, manufacturing, health, law, banking, business services, small business, agriculture, utilities, transportation, natural resources, construction, and hotels. The social-type groups are civil rights, environment, education, good government, religious, tax, welfare, and women groups.

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Titel: The effects of decentralization on special interest groups
verfasst von: Robert F. Salvino
Gregory M. Randolph
Geoffrey K. Turnbull
Michael T. Tasto
Publikationsdatum: 08.03.2019
Verlag: Springer US
Erschienen in: Public Choice / Ausgabe 3-4/2019
Print ISSN: 0048-5829
Elektronische ISSN: 1573-7101
DOI: https://doi.org/10.1007/s11127-019-00651-1

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