Cabinet Reshuffles: How Bad are They for Expertise and Policy?

An unresolved debate in the literature is whether and how cabinet reshuffles affect policy. On the one hand, ministerial changes allow the prime minister to control her/his cabinet ministers reducing agency losses. In this case, more frequent reshuffles could lead to fewer ministers treating their departments as personal fiefdoms and therefore, to lower departmental spending and government deficit. On the other hand, ministerial changes, that can serve multiple political and non-policy related reasons, could prevent the accumulation of ministerial policy expertise leading to either poor policy outcomes or the dominance of civil servants over the government. In this case, depending on the quality of the bureaucracy, we might find that higher frequency in cabinet reshuffles leads to lower economic growth and higher deficits. Using data on the political and educational profiles of cabinet ministers in key economic portfolios and data on bureaucratic quality, we test these competing hypotheses in a sample of 18 parliamentary democracies over 60 years. With the aid of these data, we are able to directly test the effect of ministerial tenure in core economic portfolios on economic growth and government debt and deficit, controlling for ministerial expertise and government duration. Our findings have important implications regarding the role of ministerial reshuffles on economic governance.