The Fiscal Consequences of State Legislative Term Limits

This study estimates the eect of state legislative term limits on state tax revenue, general expenditure and its main components: welfare, highways, health, education, and state aid to local governments. Two alternative measures of term limits are used: an original term limit index developed in this paper and the potentially endogenous average legislative turnover rate. Controlling for economic, institutional, political, and demographic factors as well as the endogeneity of legislative turnover, we nd that the two distinct measures of term limits have qualitatively similar eects on state government nances. Our estimates indicate that stricter legislative term limits not only increase legislative turnover and the size of government, but also change the composition of government spending.