Bicameral Legislatures and Fiscal Policy

Abstract

John Stuart Mill's observation in the mid-19th century is clearly outdated; the two-chamber question receives scant attention in modern political economy. The absence of continued debate might simply reflect a general satisfaction with the dual-chambered structure as a desirable democratic institution. Most developed democracies and all but one of the American states have adopted a bicameral legislative structure. In this paper we stress the many variations in bicameralism, even among the American states, and the effects these variations have on policy making and fiscal outcomes. Put simply, is not an all-or-none institution. Instead, is a variable institution that alters the identity of the median legislator within each chamber, and determines the similarity of the dominant coalitions between the two chambers. In this perspective, the impact of on policy comes principally from the different bases of representation across the two chambers. Moreover, the analysis stresses that the degree of changes regularly as a consequence of the redistricting process. The remainder of the paper is organized as follows. Section 2 reviews the main conceptual arguments underlying the function of a bicameral organization. Section 3 examines implications for fiscal policy using data from the American states. We develop several measures of bicameralism using detailed constituency data on economic and demographic characteristics at the level of state legislative districts. We then use these measures to examine the effect of interdistrict constituent homogeneity on total state government spending as well as on the major com