Disclaimer. Don't rely on these old notes in lieu of reading the literature, but they can jog your memory. As a grad student long ago, my peers and I collaborated to write and exchange summaries of political science research. I posted them to a wiki-style website. "Wikisum" is now dead but archived here. I cannot vouch for these notes' accuracy, nor can I say who wrote them.
Phillips, Justin H. 2008. Does the Citizen Initiative Weaken Party Government in the U.S. States? State Politics and Policy Quarterly 8 (summer): 127-149.
When Progressive reformers first championed adoption of the citizen initiative and other direct democracy institutions, a major reason was to limit the ability of political parties to pursue extreme policies.
In the absence of direct democracy, political parties might not have much reason to promote moderate policies. Republican legislators would generally prefer policies to the right of the median, while Democratic legislators would prefer policies to the left. Whichever party has the legislative majority has a variety of tools at its disposal to help it push policy away from the median and towards its own ideal point. These tools include control of the legislative agenda, control of committee chairmanships, and so on. In addition, the need to appease major campaign donors and partisan activists increases the incentive to use these tools. As a result, it is not the legislative majority that governs; it is the majority of the majority party that governs. When legislative control shifts from Republicans to Democrats, you might see a large shift in policy outcomes--even if only a couple of legislative seats changed hands.
But this is exactly the sort of thing that the Progressive movement sought to end. A purpose of direct democracy was to force legislators to produce policy outcomes closer to what the median voter would want--regardless of which party has the legislative majority. The purpose of Phillips's article is to ask whether they succeeded.
There are two main mechanisms by which direct democracy can be a median-enhancing institution (from Gerber 1996). The first mechanism is direct; voters can impose specific legislation on the legislature, as happened with California's famous Prop 13. The second is indirect; even if voters never use the initiative, its presence acts as a deterrent against extreme behaviors by the legislature.
Phillips finds evidence that direct democracy does matter. Party government is weaker in states with the citizen initiative than in states without. Here's how he did it:
As expected, he finds that the partisan dummies have strong relationships with the state tax burden. Democratic governments tax the most; Republicans tax the least; divided governments are in the middle. But here's the rub: these relationships disappear in states with direct democracy.
The existing literature on the relationship between partisan control and size of government has had mixed results. Phillips contends that these mixed results can be explained, at least in part, by looking at direct democracy.
I have only one complaint with this article. I'm not convinced that a simple dummy variable can adequately measure direct democracy. From state to state, there are huge variations in how easy it is to use the initiative process, leading to huge differences in how frequently the process is used. This article could be far more persuasive if it dealt with direct democracy in a more nuanced way.
Research on similar subjects
Phillips, Justin H. (author) • American Politics • Budgets and Fiscal Policy • Direct Democracy • Median Voter • Partisanship • Party Government • Responsiveness • State Politics (U.S.) • State Politics and Policy Quarterly • Taxes