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Better the devil you know? Reelected politicians and policy outcomes under no term limits

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Abstract

This paper examines the effect of having a reelected politician on policy outcomes in the absence of term limits. Using a regression discontinuity design and data from Peruvian municipalities, we find that having a reelected mayor does not have sizable effects on policy outcomes. That result seems to be driven by rapid learning-by-doing by new politicians. Differences in performance and policy outcomes are observed only early in the electoral cycle. Our findings weaken arguments against term limits based on loss of institutional or human capital and support existing interpretations of term limit effects as driven mostly by electoral incentives.

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Notes

  1. Similarly, Dal Bó and Rossi (2011) find that term lengths also have a positive effect on legislative productivity.

  2. For a review of the literature, see Buchinsky et al. (2010), Dustmann and Meghir (2005) and the references therein.

  3. After the 2014 municipal elections, the Peruvian Congress passed a law that prohibits immediate reelection of municipal mayors.

  4. Elections take place on the same date during the last quarter of the year before the start of a new term.

  5. For instance, in the 2002 elections balloting was invalidated in only 13 of 1600 districts because of violence, low turnout, or large shares of null votes.

  6. This CV is submitted to the electoral authority as a requirement for running as a candidate and, although it is self-reported, penalties are imposed for misrepresentation. Response rates are relatively high. For example, 74% and 84% of mayors in our sample reported at least one job position in 2006 and 2010, respectively.

  7. However, the availability of certain characteristics depends on the election year. For example, data on candidates’ sentences is available only for 2010.

  8. RENAMU is an annual survey of municipalities. The name of the survey stands for Registro Nacional de Municipalidades or National Registry of Municipalities. This mandatory survey is carried out and processed by the National Statistics Institute.

  9. The survey asks municipal officers to indicate tasks for which they require technical assistance or training. Those tasks include, for instance, management and accounting, planning, municipal legislation, project management, IT services, statistics, and so on. We calculate the percentage of tasks for which a municipality requests assistance and the percentage of tasks for which it requires training. The index is the average of those two measures.

  10. Outcomes from close elections have been used to explore other political economy questions such as the effect of different party attributes. See, for example, Pettersson-Lidbom (2008), Ferreira and Gyourko (2009) and Meyersson (2014).

  11. In case of a tie, elections are decided by a random draw among the tied candidates. In our sample, that scenario occurs only three times. We account for them by assigning a negligible winning margin of 0.0001 if the incumbent wins the toss and − 0.0001 otherwise. The results are robust to excluding those observations.

  12. As a robustness check, we also present estimates using a more conventional parametric approach (see Figs. A.3 and A.4 in the online appendix). The results, however, are similar.

  13. The estimator is implemented by the STATA package rdrobust.

  14. Note that by reporting robust bias-corrected p values, we reduce the likelihood that our results are affected by not using a more flexible polynomial.

  15. We corroborate the finding by calculating an empirical p value based on the distribution of the McCrary statistic for 200 equally spaced cutoffs in the interval \([-\,10{\%},10{\%}]\) of the forcing variable. The p value for the null hypothesis of no discontinuity is around 0.25. We obtain similar results using a recent test proposed by Cattaneo et al. (2017) and implemented using the STATA package rddensity.

  16. In order to reduce potential measurement error and facilitate exposition, we construct an index of budget size that aggregates all of the variables in Panel A. We construct the index by taking a simple average of normalized values of per capita municipal revenue, local tax revenue, total spending and infrastructure spending.

  17. The only exception is the budget share of transportation spending. In that case, we find a marginally significant effect at 10% confidence. The magnitude represents around 14% of the mean, or 0.20 standard deviations. Note, however, that owing to multiple hypothesis testing, we cannot rule out that the finding is a Type I error.

  18. We define mayoral experience as having served as a mayor in any district or province. Mayors need not have completed an entire term to be so defined.

  19. Note that, in the last electoral cycle, the effect, though statistically insignificant, of incumbency on implementation rates of infrastructure spending is sizable.

  20. Note that that conclusion does not mean that those features (e.g., experience or organizational continuity) are useless, but instead that no significant differences exist between reelected and rookie mayors.

  21. Note that we are unable to disentangle whether the gap shrinks because learning is fast or because the initial gap of expertise is small.

  22. To avoid mechanically increasing the advantages of reelected incumbents, the measure of public sector experience excludes time served as mayor in the municipality.

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Acknowledgements

We are grateful to Lori Beaman, Stephen Easton, Georgy Egorov, Tim Feddersen, Alexey Makarin, Matt Notowidigdo, Krishna Pendakur and seminar participants at the Midwest Political Science Association meeting, Ottawa Applied Microeconomics Workshop, Banff Empirical Microeconomics Workshop, Quebec Political Economy Conference, and the Peruvian Economic Association Meeting for useful comments and suggestions. We are also thankful to Bruno Barletti and Javier Pique; Luis Bernal and Franco Maldonado at the Peruvian Ministry of Economy and Finance; Jose Hugo Eyzaguirre and Jose Carlos Hurtado at the National Jury of Elections for their help in accessing and collecting the data.

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  1. Simon Fraser University, Burnaby, BC, V5A 1S6, Canada

    Fernando Aragón

  2. Ryerson University, Toronto, ON, M5B 2K3, Canada

    Ricardo Pique

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  1. Fernando Aragón
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Correspondence to Fernando Aragón.

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Aragón, F., Pique, R. Better the devil you know? Reelected politicians and policy outcomes under no term limits. Public Choice 182, 1–16 (2020). https://doi.org/10.1007/s11127-019-00665-9

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