Capacity Pooling: How Federal Policy Implementation Relies on State Capacity

• In Event: Federal-State Capacity and Intergovernmental Implementation

Abstract

Policy formulation does not necessarily provide commensurate resources to implementing agencies (Pressman & Wildavsky, 1984). Moreover, agencies may experience resource contraction without any reduction in assigned tasks (Ansell et al., 2021). Scholarship on administrative capacity suggests that this mismatch between mandates and available resources can generate adverse outcomes, as organizations are compelled to utilize slack resources that would otherwise be reserved for contingencies and external shocks (Elston & Zhang, 2025; O’Toole & Meier, 2010). Where such slack is limited, agencies may address new demands at the expense of the quality of existing services (Fernández‐i‐Marín et al., 2024).

While the current literature clarifies what capacity is necessary to produce desirable outcomes, much of it implicitly assumes single-actor governance. In practice, however, policy effectiveness can be shaped by actors beyond those formally designated in statute. When the capacity of one actor declines, implementation may rely on the capacities of others (Bello‐Gomez, 2020). To examine such interdependence, I focus on federal child labor regulation in the United States, a case in which the single-actor assumption is particularly inadequate for describing the capacity-outcome relationship. The federal agency that implements child labor policies has faced resource constraints between 2019 and 2024. Yet despite these constraints, the number of detected federal child labor violations increased by 31 percent in the same period. How can regulatory output increase amid declining federal capacity?

I argue that part of the answer lies in the role of state agencies as de facto contributors to federal enforcement. Under the Fair Labor Standards Act of 1938, the federal government may draw on state resources contingent on state cooperation. Therefore, it is feasible for the federal government to rely on state governments. Moreover, the costs of such cooperation are likely to vary across states. Owing to American federalism, states retain authority to legislate and enforce their own child labor policies. As a result, states with greater capacity to enforce their own regulations may face lower marginal costs of cooperating with federal enforcement, making capacity pooling more likely than those with lower capacity.

Using original data on state agency budgets for enforcing child labor laws, combined with federal data on child labor violations, I test the hypothesis that states with greater administrative capacity will detect more federal violations. I further incorporate data on unaccompanied minors, a population regarded as particularly vulnerable to illegal employment and therefore a key target for enforcement. Accordingly, I hypothesize that higher-capacity states will detect more violations associated with increases in this population. Preliminary analysis of county-year data using a two-way fixed effects model rejects the former hypothesis but supports the latter. The findings contribute to the administrative capacity literature by highlighting the role of various implementers and offer practical implications for agencies seeking to explain performance variation not fully accounted for by their own capacity.

Author

• Ji Hyun Byeon, University at Albany
  Presenting Author