Association for Public Policy Analysis & Management

Education and Health/Hospital are two key sectors as more spending on these two sectors can increase economic growth, promote income equality, and reduce poverty (Barro, 1991; Tanzi and Chu, 1998; Gupta et. al., 2002). Also, more spending in these sectors improves access to the schools and reduces mortality rates for infants and children (Gupta et. al., 2002). It is commonly believed that Democrats increase government involvement and set policies to make Education and Health/Hospital available to all people such as universal Health Care system “Affordable Care Act”, while Republicans mostly rely on the private sector and support minimum involvement of the government. Nevertheless, there is no clear answer in the literature whether party affiliation (Democratic vs. Republican) of the politicians’ matters regarding spending on these two key sectors. This paper investigates gubernatorial political differences in budgetary decisions in Education and Health/Hospital by exploiting gubernatorial election results using Regression Discontinuity Design (RDD) to get causal estimates and data from 1960 to 2012.

This paper investigates if the party affiliation of governors (Democratic vs. Republican) has an impact on their Health and Education spending using RDD and a long time period of fifty two years from 1960 to 2012. We match data from gubernatorial election and state partisan legislature with state government finances from the U.S. Census Bureau from 1960 to 2012. Using Regression Discontinuity Design, We compare budgetary decisions of governors with different political affiliation (Democratic vs. Republican) at closely contested elections to get causal partisan impact of the governors on spending. Results of this paper support gubernatorial partisan differences over budgetary decisions. Results indicate that Democrats rise government involvement to increase access to the public education and affordable health care by devoting higher portion of the budget, which are respectively 2.42 and 4.56 percentage points, toward Education and Health/ Hospital sectors. Results are robust to different controls such as state economic, demographic and political characteristics and several specifications including parametric with different polynomials and local linear regression.