Political Parties Do Matter in U.S. Cities ... For Their Unfunded Pensions
Using a novel data set linking municipal pension plans to city elections during the period 1962–2014, this paper uses a regression discontinuity design (RDD) focusing on narrow mayoral races to establish that unfunded pension benefits grow faster under Democratic-party mayors. Previous evidence shows that parties do not matter for a range of fiscal outcomes in U.S. cities, and suggests this is because Tiebout sorting imposes fiscal discipline. This paper shows that parties can matter for types of fiscal spending where benefits accrue to narrow constituencies and where costs are difficult to observe and understand for tax payers.
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Document Object Identifier (DOI): 10.3386/w25601