Working Paper: NBER ID: w28875
Authors: Jeffrey Clemens; Stan Veuger
Abstract: COVID-19 relief legislation offers a unique setting to study how political representation shapes the distribution of federal assistance to state and local governments. We provide evidence of a substantial small-state bias: an additional Senator or Representative per million residents predicts an additional $670 dollars in aid per capita across the four relief packages. Alignment with the Democratic party predicts increases in states’ allocations through legislation designed after the January 2021 political transition. This benefit of partisan alignment operates through the American Rescue Plan Act’s sheer size, as well as the formulas through which it distributed transportation and general relief funds.
Keywords: COVID-19; federal funds; political representation; small-state bias; partisan alignment
JEL Codes: E62; H12; H71; H72; H77
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political representation (D72) | federal aid distribution (H77) |
| alignment with the Democratic Party (D79) | federal fund allocations (H77) |
| political representation (D72) | small-state bias (H73) |
| small-state bias (H73) | federal aid distribution (H77) |
| economic shocks (F69) | political representation (D72) |
| state-level covariates (H73) | federal aid distribution (H77) |