DP13763 The Role of Electoral Incentives for Policy Innovation: Evidence from the U.S. Welfare Reform

Author(s): Andreas Bernecker, Pierre Boyer, Christina Gathmann
Publication Date: May 2019
Keyword(s): Electoral incentives, Policy innovation, Spillovers, Welfare reform
JEL(s): D72, D78, H75, I38, O35
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13763

This paper shows that electoral incentives matter for the decision to implement novel policies. Our empirical setting is the period prior to and following the U.S. welfare reform in 1996, which marked the most dramatic shift in social policy since the New Deal. Our findings indicate that governors with strong electoral support are less likely to experiment than governors with little support. Yet, governors who cannot be reelected actually experiment more than governors striving for reelection. These findings are robust to controlling for ideology, preferences for redistribution, the state legislature, and cross-state learning.