Ideology and Performance in Public Organizations

We combine personnel records of the United States federal bureaucracy from 1997– 2019 with administrative voter registration data to study how ideological alignment between politicians and bureaucrats affects the personnel policies and performance of public organizations. We present four results. (i) Consistent with the use of the spoils system to align ideology at the highest levels of government, we document significant partisan cycles and substantial turnover among political appointees. (ii) By contrast, we find virtually no political cycles in the civil service. The lower levels of the federal government resemble a “Weberian” bureaucracy that appears to be largely protected from political interference. (iii) Democrats make up the plurality of civil servants. Overrepresentation of Democrats increases with seniority, with the difference in career progression being largely explained by positive selection on observables. (iv) Political misalignment carries a sizeable performance penalty. Exploiting presidential transitions as a source of “within-bureaucrat” variation in the political alignment of procurement officers over time, we find that contracts overseen by a misaligned officer exhibit cost overruns that are, on average, 8% higher than the mean overrun. We provide evidence that is consistent with a general “morale effect,” whereby misaligned bureaucrats are less motivated. Our results thus help to shed light on the costs of ideological misalignment within public organizations. ∗Spenkuch: Kellogg School of Management, Northwestern University, 2211 Campus Dr, Evanston, IL 60208 (email: j-spenkuch@u.northwestern.edu); Teso: Kellogg School of Management, Northwestern University, 2211 Campus Dr, Evanston, IL 60208 (email: edoardo.teso@kellogg.northwestern.edu); Xu: Haas School of Business, University of California, Berkeley, 2220 Piedmont Ave, Berkeley, CA 94720 (email: guo.xu@berkeley.edu)