Fiscal opportunity coupled with political willingness? Unpacking the effects of TELs and partisan governments on income inequality in the American states, 1986–2020

Abstract Governments shape policy outcomes using two distinct mechanisms: rules and discretion. A simple decomposition strategy is proposed for distinguishing between these policymaking mechanisms on income inequality in the American states from 1986 to 2020. This analytical strategy is easily applicable to other policy settings. The statistical evidence, for the most part, that income inequality observed in the American states is generally unaffected by both TELs and partisan control of state governments—the lone exception being unified Republican state governments operating under a TEL. The decomposition evidence, however, shows that this is primarily the result of discretionary policymaking differences among partisan governments. This study underscores the importance of disentangling policy mechanisms that jointly occur when evaluating the consequences of government policymaking authority.