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The Adoption of Constitutional Home Rule: A test of endogenous policy decentralization

The Adoption of Constitutional Home Rule: A test of endogenous policy decentralization. Jessica Hennessey PhD Candidate University of Maryland. Research Question. Why did some states grant constitutional home rule provisions to municipalities in the late 19 th and early 20 th century?

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The Adoption of Constitutional Home Rule: A test of endogenous policy decentralization

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  1. The Adoption of Constitutional Home Rule:A test of endogenous policy decentralization Jessica Hennessey PhD Candidate University of Maryland

  2. Research Question • Why did some states grant constitutional home rule provisions to municipalities in the late 19th and early 20th century? Home rule: Municipality can independently enact, adopt and amend charter • Hypothesis: States with more heterogeneous local preferences are more likely to decentralize control by granting home rule

  3. Motivation • Provide empirical evidence of policy decentralization • Understand origins of institution so we can better evaluate its effects • Role of heterogeneity within communities • Historical importance in transition from state to local government

  4. Approach • Step 1: Observe differences in municipalities • In home rule states versus in non-home rule states • Within home rule states: adopt home rule charter or remain under general legislation • Step 2: Estimate municipal-level latent taste for home rule (use data from home rule states) • Step 3: Compare predicted municipal preferences in home rule states to predicted municipal preferences in non-home rule states

  5. Municipal Decision:Home Rule or General Legislation • Organization under General Legislation • Set by state legislature, uniform for all municipalities • Common features: • Structure (example: one mayor, 5 trustees) • Elections (frequency, number of wards) • Powers • Debt and tax limitations (shared by Home Rule municipalities) • Home Rule • Ability to draft and adopt own charter • Formal recognition of local self-determination • Features of charters • Governance structure • Facilitate ownership and operation of public utilities • Initiative, referendum, recall • Impose more stringent tax and debt limits

  6. Who Adopts a Home Rule Charter • Three primary factors: size, growth, and infrastructure investment • Degree of homogeneity/heterogeneity • Alesina and La Ferrara (2000) • Buchanan and Tullock (1962) • Different from average municipality in state (general legislation not appropriate)

  7. Data Available • Year of charter adoption • 11 Home Rule States • For first home rule charter • Information up until 1935 • Municipal level • Wealth, Debt and Taxation from Census • Population, Gross Debt less Sinking Fund, Sinking Fund Assets • 1890, 1902: all municipalities • 1913, 1922, 1932: municipalities >2500 • County level • ICPSR 2896: Native born population, urban population • ICPSR 8611: Congressional election results • % Democrat, % Other • Political HHI:

  8. Home Rule versus Non Home Rule States1890 Data for use in Probit Estimation

  9. In HR States: Home Rule versus General Legislation1890 Data for use in Probit Estimation

  10. Econometric Specification • Cross-section (1890) estimation • Panel data estimation Covariates • Xics: population, population growth, gross debt less sinking fund per capita, sinking fund assets per capita • Zcs: % native-born, political HHI, % Democrat, % Other • Vics,cs: population growth, % native, gross debt less sinking fund per capita, political party • Ss : state fixed effects • Yt : time effects • Assumption: decisions are independent

  11. Results on 1890 Data

  12. Results on Panel Data

  13. Duration Model • Likelihood Function Where • Specification • Same X as used in probit model, include state effects

  14. Duration Results

  15. Comparing Municipalities • Use estimates to generate predictions for municipalities in Home Rule states and Non-Home Rule states • Probit: probability of adopting HR charter • Duration: probability of survival (not adopt HR charter by 1935) • How to quantify heterogeneity of preferences • Strength of preference • Variance

  16. Summary of Results

  17. Conclusion • States that adopted home rule have greater heterogeneity in estimated municipal preference for home rule than states that did not adopt home rule • Contribution • Empirical evidence of policy decentralization • An explanation for institution of home rule • Unique municipal-level dataset • Future work • Laboratory federalism: empirical exploration with a spatial/geographic component • Political economy: effects of HR • How does HR relate to other facets of the state-local relationship, such as the evolution of tax structures

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