Vaibhav Rathi

Does political influence make a bureaucracy more productive, or does it merely reorder the bureaucracy’s priorities? The answer matters for the cost of regulation, because the burden firms bear depends on how quickly the bureaucracy processes their applications as well as on what the rules require. I study this question in India, measuring influence by alignment between the local politicians and the state majority party, and linking it to the regulatory life cycle of large public and private investment projects. Using two empirical designs that use independent sources of variation in political influence, I find that political influence changes bureaucratic priorities, even when the total number of regulatory applications remains unaffected. Influence lowers the probability that a waiting private project is approved by 5.6 to 6 percentage points, roughly half the baseline, and raises approvals of public projects by a similar amount. I provide evidence that these effects are likely to be the result of career benefits that bureaucrats draw by giving higher priorities to influential politicians. The estimates imply about 4 months of additional delay per private project and 0.29 million private jobs affected. The results offer one plausible explanation for why, across 100 economies, the rules explain less than half of the variation in how firms experience regulation. Insulating the bureaucracy from political influence would improve the regulatory environment for private firms without any change in the rules, at some cost to the projects politicians favor.

This paper studies how shifts in local political influence reshape the subnational allocation of the bureaucratic state, even when aggregate bureaucratic strength and formal institutions remain fixed. I develop a framework in which heterogeneity in politicians’ influence within state-level posting markets, combined with bureaucrats’ career incentives, endogenously reallocates bureaucratic capacity across space. Using India’s 2008 electoral delimitation, which quasi-randomly altered districts’ exposure to reserved caste politicians, I show that districts newly exposed to reserved constituencies experience a sharp and persistent decline in the flow of incoming bureaucrats, leading to a contraction in local state capacity (size effect) and systematic changes in officer type (composition effect). These effects are driven by the caste identity of the elected politicians rather than political turnover per se. I formalize two distinct channels that generate these effects: assortative matching and career concerns of bureaucrats and find evidence for both. More broadly, the paper documents an unintended effect of a political reform: policy aimed at increasing political representation also caused a decrease in the local state capacity.

Police departments in the USA draw the majority of their funding from revenues generated by local governments. This means that funding for local police can be unequal within a metropolitan area among neighbouring cities. What are the consequences of this arrangement for the allocation of police officers, the quality of police representation in majority-minority communities, and aggregate crime and officer-involved violence? Using a shift-share instrument, we estimate the effects of increasing income inequality in MSAs with high levels of fiscal fragmentation (i.e., instances where the population is divided across many different legally and fiscally independent cities), both relative to increasing inequality when fragmentation is low, and relative to highly fragmented MSAs that do not see increasing inequality.