Political competition, policy and growth: theory and evidence from the United States

Abstract

This paper develops a simple model to analyze how lack of political competition may lead to policies that hinder economic growth. We test the predictions of the model exploiting variation in political competition across US states. We find robust evidence that lack of political competition in a state is associated with anti-growth policies: higher taxes, lower capital spending and less likely use of right-to-work laws. We also document a strong link between low political competition and low income growth.

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