Assessing the Effectiveness of the "One-in-One-Out" Rule: An Analysis of Regulatory Offsetting in German Legislation

Constant policy growth is a ubiquitous feature of modern democracies, which threatens to undermine their legitimacy in the long run. Most importantly, it burdens businesses, citizens, and the public administration itself. Some countries have thus introduced so-called "regulatory offsetting" programs to make policy growth more sustainable. Regulatory offsetting requires governments to compensate for the production of new policies by simultaneously abolishing existing policy provisions and administrative burdens. This is also commonly referred to as the "one-in-one-out" rule. While regulatory offsetting has become an essential regulatory tool in modern democracies, we do not know whether regulatory offsetting schemes are also effective in limiting or slowing down policy growth. This paper addresses this issue by examining the case of Germany, which introduced a regulatory offsetting scheme in 2015. Germany is a great case to study as it exempts all European Union (EU) policies from the need for compensation. This allows us to use a ‘difference-in-difference design’ to contrast the development of domestic (‘treated’) and EU-induced (‘control’) policies over time and to look for differences before and after introducing the regulatory offsetting scheme. Our analysis relies on a text-as-data approach that analyses German legislation from 2008 to 2023 with regard to the legislation’s length (words, sentences, articles) and the number of restrictive and abolishing clauses.