The Effect of Presidential Particularism on Economic Well-Being: A County-Level Analysis

Abstract

Does it pay to be a locale of political importance? Political business cycle theory predicts that the executive has an incentive to manipulate policy to increase the chances of their party remaining in office. In particular, core counties (those that vote for the current administration) have been shown to enjoy disproportionately higher federal spending. In this paper, we explore how this funding affects the well-being of an area by estimating the effect of presidential particularism on governmental transfers and (productive) income per-capita using county-level data from 1993 to 2012. We find that transfer payments tend to be higher and income lower in counties that vote for the current administration. These findings are robust across a wide number of specifications including fixed effects, first differences, a first differenced model with county-specific time trends, and a matching analysis. Moreover, results hold when examining the subset of counties that only voted for a single party throughout the entire sample where the treatment (whether the county voted for the current administration) is largely exogenous to the county in question.