Government and the distribution of skills

Individuals' life chances in the future will very much depend on how we invest in our children now. An optimal human capital model would combine a high mean with minimal variance of skills. It is well-established that early childhood learning is key to adult success. The impact of social origins on child outcomes remains strong, and the new role of women poses additional challenges to our conventional nurturing approach to child development. This paper focuses on skill development in the early years, examining how we might best combine family inputs and public policy to invest optimally in our future human capital. I emphasize three issues: one, the uneven capacity of parents to invest in children; two, the impact of mothers' employment on child outcomes; and three, the potential benefits of early pre-school programmes. I conclude that mothers' intra-family bargaining power is decisive for family investments and that universal child care is key if our goal is to arrive at a strong mean with minimal variance.

State Government E-Commerce Study Encouraging the Use of Electronic Financial Transactions With the Citizens of Iowa, January 20, 2006

This report was produced in compliance the 2005 Iowa Acts, Chapter 52 passed by the Eighty-First General Assembly, Session One (2005), requiring that it be submitted to the General Assembly by January 20, 2006. The legislative language mandating the report reads as follows: “It is the intent of the general assembly to encourage the use of electronic transactions with regard to the state's dealings with the citizens of Iowa and other persons. The department of administrative services shall develop recommendations, including proposed legislation, to encourage the use of electronic commerce, including the acceptance of credit card payments, with regard to transactions involving the state. The department shall consult with the state treasurer, state entities currently accepting credit card payments, and any other state entities identified as considering the acceptance of credit card payments when developing the recommendations. The department shall deliver a report to the general assembly by January 20, 2006, including any recommendations, proposed legislation, and other related information, including cost information associated with credit card payments.”

Policy Making in Divided Government. A Pivotal Actors Model with Party Discipline.

This article presents a formal model of policy decision-making in an institutional framework of separation of powers in which the main actors are pivotal political parties with voting discipline. The basic model previously developed from pivotal politics theory for the analysis of the United States lawmaking is here modified to account for policy outcomes and institutional performances in other presidential regimes, especially in Latin America. Legislators' party indiscipline at voting and multi-partism appear as favorable conditions to reduce the size of the equilibrium set containing collectively inefficient outcomes, while a two-party system with strong party discipline is most prone to produce 'gridlock', that is, stability of socially inefficient policies. The article provides a framework for analysis which can induce significant revisions of empirical data, especially regarding the effects of situations of (newly defined) unified and divided government, different decision rules, the number of parties and their discipline. These implications should be testable and may inspire future analytical and empirical work.

Government Spending and Re-election

Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population cutoffs over the period 1982-1985. We find that extra fiscal transfers resulted in a 20% increase in local government spending per capita, and an increase of about 10 percentage points in the re-election probability of local incumbent parties. We also find positive effects of the government spending on education outcomes and earnings, which we interpret as indirect evidence of public service improvements. Together, our results provide evidence that electoral rewards encourage incumbents to spend part of additional revenues on public services valued by voters, a finding in line with agency models of electoral accountability.

Fiat Money, Intrinsic Properties, and Government Transaction Policy

Why do people coordinate on the use of valueless pieces of paper as generally accepted money? A possible answer is that these objects have intrinsic properties that make them better candidates to be used as media of exchange. Another answer stresses the fact that unconvertible fiat money will not easily appear unless there is a centralized institution that favors its use. The main objective of the paper is to analyze these questions. In order to do this, we take a model of commodity money in which fiat money does not play any significant role and modify it to examine under which circumstances fiat money might come to circulate as medium of exchange. Some of the results obtained from the model differ in a rather substantial way from previous related literature.

Report to Government Oversight Committee Regrading Soil and Water Conservation Districts Competition with Small Business, 2006

At the request of the Government Oversight Committee, the Ombudsman gathered information regarding competition by county Soil and Water Conservation Districts (SWCD) with small business through the sale of products and services. The goal of the Ombudsman’s review was to assist the Government Oversight Committee (Committee) in gaining an objective understanding of the issues so the Committee can ascertain whether there is a problem that requires legislation this legislative session. The Ombudsman focused on gathering specific information from four SWCD offices in central Iowa; Dallas, Greene, Guthrie and Jasper. These offices were specifically identified in documentation presented to the Government Oversight Committee by affected small business owners (contractors), Jon Judson of Diversity Farms and Dan Brouse of Iowa Restorations. However, with 100 SWCDs in Iowa,1 each with their own elected commissioners and each with different practices, priorities and fundraising activities, what the Ombudsman learned about these four counties may not be applicable to all the SWCDs in Iowa. The Ombudsman assigned the case to the Assistant Citizens’ Aide/Ombudsman for Small Business, Kristie Hirschman. For reference purposes in this report, actions taken by Ms. Hirschman will be ascribed to the Ombudsman.

Continuity of Government Planning Interim Study Committee, March 2007

The Legislative Council established the Continuity of Government Planning Interim Study Committee in 2006 and authorized the Committee to meet during the 2006 Legislative Interim. The Committee was given the following charge: Examine issues relating to the continued functioning of state government following a disaster, including gubernatorial succession, replacement of constitutional officers and department heads, legislative elections to fill vacancies, and continued funding of state government if the General Assembly is unable to meet and pass a budget.

Are rules-based government programs shielded from special-interest politics? Evidence from revenue-sharing transfers in Brazil

Manipulation of government finances for the benefit of narrowly defined groups is usuallythought to be limited to the part of the budget over which politicians exercise discretion inthe short run, such as earmarks. Analyzing a revenue-sharing program between the centraland local governments in Brazil that uses an allocation formula based on local population estimates,I document two main results: first, that the population estimates entering the formulawere manipulated and second, that this manipulation was political in nature. Consistent withswing-voter targeting by the right-wing central government, I find that municipalities withroughly equal right-wing and non-right-wing vote shares benefited relative to opposition orconservative core support municipalities. These findings suggest that the exclusive focus ondiscretionary transfers in the extant empirical literature on special-interest politics may understatethe true scope of tactical redistribution that is going on under programmatic disguise.

Social capital, government expenditures, and growth

Countries with greater social capital have higher economic growth. We show that socialcapital is also highly positively correlated across countries with government expenditureon education. We develop an infinite-horizon model of public spending and endogenousstochastic growth that explains both facts through frictions in political agency whenvoters have imperfect information. In our model, the government provides servicesthat yield immediate utility, and investment that raises future productivity. Voters aremore likely to observe public services, so politicians have electoral incentives to underprovidepublic investment. Social capital increases voters' awareness of all governmentactivity. As a consequence, both politicians' incentives and their selection improve.In the dynamic equilibrium, both the amount and the efficiency of public investmentincrease, permanently raising the growth rate.

Does direct democracy reduce the size of government? New evidence from historical data, 1890-2000

Using historical data for all Swiss cantons from 1890 to 2000, we estimate the causal effect of direct democracy on government spending. The main innovation in this paper is that we use fixed effects to control for unobserved heterogeneity and instrumental variables to address the potential endogeneity of institutions. We find that the budget referendum and lower costs to launch a voter initiative are effective tools in reducing canton level spending. However, we find no evidence that the budget referendum results in more decentralized government or a larger local government. Our instrumental variable estimates suggest that a mandatory budget referendum reduces the size of canton spending between 13 and 19 percent. A 1 percent lower signature requirement for the initiative reduces canton spending by up to 2 percent.

Catalan government popularity. An example of economic effects on sub-national government support

The aim of this essay is to deal with economic voting in contexts ofmultilevel governance and to be a contribution to the debate on attribution of responsibilities in popularity functions literature. We use aggregate and individual data from Catalonia in order to analyse the relation between the state of the economy and the support for a sub-state government. The empirical analysis shows that the responsibility hypothesis works in regional governments without explicit macroeconomic competencies. We have also considered the evaluations of government performance on certain specific policies in order to clarify and determine the factors that drive Catalan government support. The article considers the implications of the findings for future attempts to model party support in a context of the European Union.

Policy making in divided government. A pivotal actors model with party discipline

This article presents a formal model of policy decision-making in an institutional framework of separation of powers in which the main actors are pivotal political parties with voting discipline. The basic model previously developed from pivotal politics theory for the analysis of the United States lawmaking is here modified to account for policy outcomes and institutional performances in other presidential regimes, especially in Latin America. Legislators' party indiscipline at voting and multi-partism appear as favorable conditions to reduce the size of the equilibrium set containing collectively inefficient outcomes, while a two-party system with strong party discipline is most prone to produce 'gridlock', that is, stability of socially inefficient policies. The article provides a framework for analysis which can induce significant revisions of empirical data, especially regarding the effects of situations of (newly defined) unified and divided government, different decision rules, the number of parties and their discipline. These implications should be testable and may inspire future analytical and empirical work.

State Government E85 Use Plan filed December 31, 2007

The State Government E85 Use Plan was mandated by Culver Executive Order 3 and was required to be submitted to the Governor’s Office December 31, 2007. The plan makes policy recommendations governing the use of E85 fuel by state government, the reporting of E85 fuel sales statewide, and establishes a task force to discuss biodiesel use for state government, local government, and private industry and make recommendations.