Research Highlights Article
September 13, 2024
Building better bureaucracy
The effects of the Pendleton Act on the quality of public services in the United States
Source: Library of Congress, Washington, D.C. (file no. LC-DIG-ppmsca-15781)
A competent civil service is widely seen by political economists and policymakers as crucial for good government and long-run economic development. But there is little empirical evidence that pinpoints the reforms needed to create effective state institutions.
In a paper in the American Economic Review, authors Abhay Aneja and Guo Xu investigate historic changes to the federal civil service in the United States and show that taking bureaucratic staffing decisions out of the hands of elected politicians can have a significant positive impact on the quality of public service delivery.
For much of the 19th century, staffing the US federal government was based on a so-called “spoils system.” In return for financial and political support, presidential politicians winning office rewarded their party loyalists with bureaucratic jobs. The system was ripe for abuse and helped powerful political machines dominate politics during the Gilded Age.
In 1881, the assassination of President James Garfield helped galvanize pro-reform sentiment that had been growing since the end of the Civil War. Garfield’s assassin, Charles Guiteau, was motivated in part by a sense that Garfiield owed him an office appointment, a fact which reformers used to push for change. President Chester Arthur signed the Pendleton Civil Service Reform Act into law in 1883. The bill called for the open selection of government employees based on merit.
Initially, the Pendleton Act shielded only a modest fraction of federal workers from political interference. But it grew to cover nearly all federal jobs as subsequent administrations built on the reforms.
To quantify the initial impact of the Pendleton Act, the authors analyzed arguably the most important federal institution of the 19th century: the US Postal Service. In terms of personnel, the postal service was, and remains today, the largest civilian agency within the federal government.
The authors combined information on delivery errors, the number of workers, and personnel characteristics to measure the performance and productivity of local post offices before and after the reforms were rolled out. In particular, the reforms came in two major waves, one in 1883 and a second in 1893, which allowed the researchers to examine how performance measures changed in post offices across hundreds of cities from 1879 to 1901.
A map of postal reforms
The chart below shows the locations of all post offices open between 1860 and 1905 in Panel A. Panel B shows the locations of reformed post offices and their timing.
When they compared reformed cities to non-reformed cities, they found substantial improvements in quality. The number of delivery errors decreased by roughly 20 percent, which suggests a significant increase in reliability. The reforms also led to increases in the overall volume per mail carrier and cost per volume, indicating large productivity gains.
While the researchers initially thought these gains might be driven by the rule-based, open selection of employees based on merit, that’s not what they found.
“It turns out that the first-order effect that seems to be driving this performance improvement is a reduction in turnover,” Xu said. “We're talking about clerks and carriers in a local post office getting fired and replaced with every election. It's exactly when those turnover events happen during elections that we see the performance gains show up.”
On the one hand, it seems crazy that the president wouldn't be able to control people through firing and hiring; you should be able to control your workers to implement your plan. But it's a double-edged sword. If you give the politician all that discretion, they can also abuse it for private political gains.
Guo Xu
Overall, the findings indicate that by insulating federal employees from politics, the Pendleton Act made the federal government a more stable organization capable of preserving institutional knowledge. Today, extremely few positions in the federal government—apart from cabinet level appointments—are filled by the president.
“On the one hand, it seems crazy that the president wouldn't be able to control people through firing and hiring; you should be able to control your workers to implement your plan. But it's a double-edged sword,” Xu told the AEA in an interview. “If you give the politician all that discretion, they can also abuse it for private political gains.”
♦
“Strengthening State Capacity: Civil Service Reform and Public Sector Performance during the Gilded Age” appears in the August 2024 issue of the American Economic Review.