The Effect of Electoral Competition on Government-Subsidized Small Business Loans: Evidence from Congressional Gerrymandering

Abstract

Prior attempts to link gerrymandering to incumbency advantage and political polarization overlook an important strategic nuance: a partisan gerrymanderer has an interest in attacking vulnerable incumbents of the opposing party while protecting vulnerable incumbents from its own party. Tracking incumbents in the U.S. House of Representatives before and after redistricting, we show that a narrow loss for the gerrymandering party's candidate in the pre-redistricting election predicts greater incumbent vulnerability in the post-redistricting election relative to a narrow win for the gerrymandering party's candidate. We develop a simple model to show that elected politicians who lose partisan support will compensate by changing their optimal mix of partisan positioning and individual effort. We test the model's predictions using the discontinuity in incumbency advantage predicted by partisan gerrymandering, and find that incumbents weakened by gerrymandering are indeed less partisan in their congressional voting behavior and bring more discretionary federal spending to their districts.