Is the "Governor Effect" Real?

September 12, 2011

Rick Perry of Texas is the latest in a long-line of governors who tout their states' performance as evidence of their ability to supercharge the national economy.  But how much impact does a governor really have, asks Edward L. Glaeser, a professor of economics at Harvard University.

Reasonable people can question how much credit Perry deserves, but there is no question that since the recession, Texas has dramatically outperformed the nation.  But do those numbers tell us more about Texas or Governor Perry?

  • To get a better sense of whether the state's success is because of a "Perry effect,'' Glaeser looked at data on private employment growth and unemployment rates across all 50 states since 1990.
  • Controlling only for national economic conditions, it looks as if Governor Perry is associated with almost 1 percent more private job growth every year.

But well before Perry came along, the Texas model, with low taxes, limited regulations and energy-related resources, has proven remarkably attractive to businesses and migrants.  When Glaeser also controls for Texas' tendency since 1989 to add jobs more quickly, the Perry effect on employment growth drops below one-tenth of 1 percent.  So while Perry can claim to be a faithful representative of the Texas model, he hasn't outperformed his state's history.

Glaeser did a similar analysis for Romney and Huntsman, each of whom served for four years.  

  • Controlling only for the state of the national economy, the Romney effect on private employment is negative 1.5 percent per year.
  • That effect actually becomes more negative when Glaeser controls for his being in Massachusetts, where the longer-term economic trends have otherwise been fairly strong.
  • Under Huntsman, meanwhile, job growth in Utah was 1.6 percent higher than the national norm, and the unemployment rate was 1.4 percent lower -- an impact much greater than the Perry effect.
  • Even when controlling for Utah's generally strong performance since 1999, he's still associated with more than 1 percent faster job growth and 1 percent lower unemployment rates.

Source: Edward L. Glaeser, "Is the 'Governor Effect' Real?" Boston Globe, September 8, 2011.

For text:

http://www.boston.com/news/politics/articles/2011/09/08/is_the_governor_effect_real/

 

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