Partisan bias, electoral volatility, and government effi ciency∗

Electoral agency models suggest that government effi ciency is better when voters penalize poor performance, and party competition is balanced. Uncertainty in the electoral mechanism dillutes the incentive to produce effi ciently. We test this proposition on panel data on local governments. The dataset includes a broad set of indicators on service output and quality, which facilitates the measurement of cost effi ciency. We use historical data on local voting in national elections to measure partisan bias, while electoral volatility is measured on past variations in neighboring municipalities. The empirical analyses show that partisan bias lowers cost effi ciency, particularly in municipalities with large electoral volatility.