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on Collective Decision-Making |
| By: | Chevalier, Arnaud (Royal Holloway, University of London); Elsner, Benjamin (University College Dublin); Lichter, Andreas (IZA); Pestel, Nico (IZA) |
| Abstract: | This paper studies the impact of immigration on public policy setting. As a natural experiment, we exploit the sudden arrival of eight million forced migrants in West Germany after World War II. These migrants were on average poorer than the West German population, but unlike most international migrants they had full voting rights and were eligible for social welfare. Using panel data for West German cities and applying difference-in-differences and an instrumental variables approach, we show that local governments responded to this migration shock with selective and persistent tax raises as well as shifts in spending. In response to the inflow, farm and business owners were taxed more while residential property and wage bill taxes were left unchanged. Moreover, high-inflow cities significantly raised welfare spending while reducing spending on infrastructure and housing. Election data suggest that these policy changes were partly driven by the political influence of the immigrants: in high-inflow regions, the major parties were more likely to nominate immigrants as candidates, and a pro-immigrant party received high vote shares. We further document that this episode of mass immigration had lasting effects on people's preferences for redistribution. In areas with larger inflows in the 1940s, people have substantially higher demand for redistribution more than 50 years later. |
| Keywords: | migration, taxation, spending, welfare state |
| JEL: | J61 H20 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11725&r=cdm |
| By: | Simone Moriconi (IÉSEG School of Management); Giowanni Peri (University of California, Davis); Riccardo Turati (IRES, Université Catholique de Louvain); |
| Abstract: | In this paper we document the impact of immigration at the regional level on Europeans’ political preferences as expressed by voting behavior in parliamentary or presidential elections between 2007 and 2016. We combine individual data on party voting with a classification of each party’s political agenda on a scale of their "nationalistic" attitudes over 28 elections across 126 parties in 12 countries. To reduce immigrant selection and omitted variable bias, we use immigrant settlements in 2005 and the skill compo- sition of recent immigrant flows as instruments. OLS and IV estimates show that larger inflows of highly educated immigrants were associated with a change in the vote of citizens away from nationalism. How- ever the inflow of less educated immigrants was positively associated with a vote shift towards nationalist positions. These effects were stronger for non-tertiary educated voters and in response to non-European immigrants. We also show that they are consistent with the impact of immigration on individual political preferences, which we estimate using longitudinal data, and on opinions about immigrants. Conversely, immigration did not affect electoral turnout. Simulations based on the estimated coefficients show that immigration policies balancing the number of high-skilled and low-skilled immigrants from outside the EU would be associated with a shift in votes away from nationalist parties in almost all European regions. |
| Keywords: | Immigration, Nationalism, Elections, Europe |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e201713&r=cdm |
| By: | Amedeo Piolatto (Universidad de Alicante) |
| Abstract: | Lower-level governments often receive federal support through transfers or bailouts. We study how the regional or local ties of federal politicians can steer this process. We build a two-tier model of government, where regionally elected federal legislators bargain over federal support aimed at their own constituency. This leads to strategic voting on the regional level. Federal legislators are strategically elected to watch over the interests of their own region, cushioning shocks to local consumption and driving down borrowing costs. Lower-level legislators anticipate this, which sets the stage for regional over-borrowing both if they receive annual grants, or when a bailout scheme is introduced during periods of crisis. Voters strategically select federal representatives with more extreme positions than the median voter, as long as federal co-funding schemes imply some degree of interregional redistribution. These theoretical predictions are con¿rmed by our empirical analysis, where we compare the political extremism of representatives elected to the EU Parliament with that of representatives elected to national Parliaments. |
| Keywords: | Strategic Delegation, Decentralisation, Soft Budget Constraints, Political Extremism, Bailouts, Intergovernmental Grants, Fiscal Federalism. |
| JEL: | H6 H71 H74 H77 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2018-05&r=cdm |
| By: | Seror, Avner; Verdier, Thierry |
| Abstract: | In this paper, we present a microfounded theory of multi-candidate political competition taking an "industrial organization" perspective of politics. The analytical framework is shown to be exible enough to address several applications on the topics of special interest politics, coalition formation in the legislature in proportional elections, and redistribution under alternative electoral rules. |
| Keywords: | Frechet distributions; Plurality; Probabilistic Voting Models; Proportionality; public policy; redistribution; runoff |
| JEL: | D71 D72 L11 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13121&r=cdm |
| By: | Anja Prummer (Queen Mary University of London) |
| Abstract: | This paper characterizes the optimal advertising strategy of candidates in an election campaign, where groups of heterogeneous voters are targeted through media outlets. We discuss its effects on the implemented policy and relate it to the well-documented increase in polarization. Additionally, we empirically establish that polarization displays electoral cycles. These cycles emerge in the model as candidates find it optimal to cater to different groups of voters and thus to adjust policies. Further, technologies that allow targeting voters more precisely tend to increase polarization. Our prediction is confirmed empirically as an increase in internet penetration leads to higher polarization. |
| Keywords: | Targeting, Media, Networks, Voting |
| JEL: | D85 D72 D83 |
| Date: | 2016–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:805&r=cdm |
| By: | Anna Maria Mayda (Department of Economics and SFS, Georgetown University); Giovanni Peri (University of California, Davis); Walter Steingress (Bank of Canada - Banque du Canada) |
| Abstract: | In this paper we study the impact of immigration to the United States on the vote for the Republican Party by analyzing county-level data on election outcomes between 1990 and 2010. Our main contribution is to separate the effect of high-skilled and low-skilled immigrants, by exploiting the different geography and timing of the inflows of these two groups of immigrants. We find that an increase in the first type of immigrants decreases the share of the Republican vote, while an inflow of the second type increases it. These effects are mainly due to the local impact of immigrants on votes of U.S. citizens and they seem independent of the country of origin of immigrants. We also find that the pro-Republican impact of low-skilled immigrants is stronger in low-skilled and non-urban counties. This is consistent with citizens’ political preferences shifting towards the Republican Party in places where low-skilled immigrants are more likely to be perceived as competition in the labor market and for public resources. |
| Keywords: | Immigration, Republican Party, Electoral Effects, Economic and Fiscal Channels. |
| JEL: | F22 J61 |
| Date: | 2018–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~18-18-09&r=cdm |
| By: | Thomas Groll (Columbia University); Anja Prummer (Queen Mary University of London) |
| Abstract: | We study lobbying in a setting in which decision-makers share resources in a network. Two opposing interest groups choose which decision-maker they want to target with their resource provision, and their decision depends on the decision-makers' ideologies as well as the network structure. We characterize the lobbying strategies in various network settings and show that a higher resource flow as well as homophily reinforce decision-makers' ideological bias. We highlight that competing lobbyists' efforts do not neutralize each other and their payoffs and competitive advantages depend on the networks they face. Our findings are consistent with empirically established lobbying activities. |
| Keywords: | Networks, Lobbying, Targeting, Flow of resources, Ideology, Centrality, Homophily, Colonel Blotto, Externalities |
| JEL: | D72 D78 D83 D85 |
| Date: | 2016–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:808&r=cdm |
| By: | Rémi Suchon (Univ Lyon, ENS de Lyon, GATE UMR 5824, F-69342 Lyon, France); Daniel Houser (yDepartment of Economics and the Interdisciplinary Center for Economic Science, George Mason University, Fairfax, VA, United States.) |
| Abstract: | We test whether individuals internalize the effects that their behavior may have on the social image of their group. In our experiment, we recruit pairs of real-life friends and study whether rule breaking in the form of misreporting decreases when misreporting may have negative spillovers on the image of the friend. We find that participants hurt their friends' social image by misreporting because external observers update their beliefs: they rightfully expect that a participant whose friend misreported is likely to misreport himself. However, participants misreport as often when their behavior can hurt the friend's image as when it cannot, even though hurting their friends' image reduces their own monetary gains. Our interpretation is that they underestimate the impact of their behavior on external observers' beliefs about their friends. Our results cast doubts on the capacity of groups to sustain a good image absent the possibility of punishment, which is bad news. The good news is that external observers may use image spillovers to update their beliefs and interact with members of social groups more efficiently. |
| Keywords: | Social image, Group image, Misreporting, Experiment |
| JEL: | C92 D91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1819&r=cdm |
| By: | Vincent Anesi (University of Nottingham, School of Economics); T Renee Bowen (University of California, San Diego and NBER) |
| Abstract: | We study conditions under which optimal policy experimentation can be implemented by a committee. We consider a dynamic bargaining game in which committee members choose to implement either a risky reform or a safe alternative with known returns each period. We find that when no redistribution is allowed the unique equilibrium outcome is generically inefficient. When committee members are allowed to redistribute resources (even arbitrarily small amounts), there always exists an equilibrium that supports optimal experimentation for any voting rule with no veto players. With veto players, however, optimal policy experimentation is possible only with a sufficient amount of redistribution. We conclude that veto rights are more of an obstacle to optimal policy experimentation than constraints on redistribution. |
| Keywords: | voting, redistribution, policy experimentation |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2018-09&r=cdm |
| By: | Laurent Bouton (Department of Economics, Georgetown University); Micael Castanheira; Allan Drazen (Department of Economics, University of Maryland) |
| Abstract: | We propose a formal model of small campaign contributions driven by an electoral motive, that is, by the possible influence of contributions on the outcome of an election. Electoral considerations produce strategic interactions among contributors, even when each donor takes as given the actions of other donors. These interactions induce patterns of individual contributions that are in line with empirical findings in the literature. For instance, equilibrium contributions increase when the support for the two candidates is more equal --a “closeness effect”-- and relative contributions for the advantaged party are smaller than their underlying advantage --an “underdog effect”. We then study the impact of different forms of campaign finance laws. We show that caps affect small donors even if they are not directly capped, and that it may be optimal to combine caps with a progressive tax on contributions. We also indicate why our results may have implications for empirical studies of campaign contributions. |
| Keywords: | Campaign Donations, Campaign Finance Laws, Elections, Income Inequality |
| JEL: | D71 D72 H31 |
| Date: | 2018–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~18-18-05&r=cdm |
| By: | Algan, Yann; Beasley, Elizabeth; Cohen, Daniel; Foucault, Martial |
| Abstract: | We examine the dislocation from the traditional left-right political axis in the 2017 French election, analyze support for populist movements and show that subjective variables are key to understanding it. Votes on the traditional left-right axis are correlated to ideology concerning redistribution, and predicted by socio-economic variables such as income and social status. Votes on the new diagonal opposing "open vs closed society" are predicted by individual and subjective variables. More specifically, low well-being predicts anti-system opinions (from the left or from the right) while low interpersonal trust (ITP) predicts right-wing populism. |
| Keywords: | inequality; populism |
| JEL: | P26 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13103&r=cdm |
| By: | Manuel Hidalgo-Pérez (Universidad Pablo de Olavide); José Luis Ferreira (Universidad Carlos III); Carmen Rubio-Castaño (Universidad Pablo de Olavide) |
| Abstract: | Economic performance has been historically better under Democrat presidents compared to Republican ones. This gap has not yet been fully explained appealing to better management or luck. In fact, the economic cycles under one group of administrations or the other are quite similar. Blinder and Watson (2016) provide the best attempt so far at solving the paradox, but can explain only half of the gap. Drawing from them, and using a different method to account for the initial conditions of each presidential term, we are able to show that the phase of the economic cycle at the different elections are correlated to the party of the president. We also find ample evidence suggesting that there is a subtle causality: when the unemployment is high, the probability of a person voting for a Democrat president increases, thus causing Democrats being elected more often at the end of a recession and the beginning of a recovery. This, and not the difference in competence dealing with the economic cycles, is enough to close the gap. |
| Keywords: | Business cycle, econometric time series, elections, economic growth |
| JEL: | D72 E23 E32 E65 N12 N42 C43 C32 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:18.10&r=cdm |
| By: | Becher, Michael |
| Abstract: | There is striking variation across parliamentary democracies in the power of prime ministers to employ two prominent procedures to resolve legislative conflict: the vote of confidence and the dissolution of parliament. While previous contributions in comparative politics have investigated each of these two fundamental institutions in isolation, I develop a simple unified model to unbundle how this richer variety of institutional configurations shapes political bargaining over policy. The analysis clarifies that the effects of the confidence vote and dissolution power interact. As a consequence, there can be a non-monotonic effect of increasing prime ministers’ formal power on their ability to shape the policy compromise. Counterintuitively, introducing dissolution power makes the prime minister worse off under some conditions. These results suggest new directions for empirical research on the consequences of parliamentary institutions for legislative politics and policy. They also lay analytical foundations for explaining institutional variation and reforms. |
| JEL: | D72 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32897&r=cdm |
| By: | Mariana Carrera; Heather Royer; Mark F. Stehr; Justin R. Sydnor; Dmitry Taubinsky |
| Abstract: | Recent large-scale randomized experiments find that helping people form implementation intentions by asking when and where they plan to act increases one-time actions, such as vaccinations, preventative screenings and voting. We investigate the effect of a simple scalable planning intervention on a repeated behavior using a randomized design involving 877 subjects at a private gym. Subjects were randomized into i) a treatment group who selected the days and times they intended to attend the gym over the next two weeks or ii) a control group who instead recorded their days of exercise in the prior two weeks. In contrast to recent studies, we find that the planning intervention did not have a positive effect on behavior and observe a tightly estimated null effect. This lack of effect is despite the fact that the majority of subjects believe that planning is helpful and despite clear evidence that they engaged with the planning process. |
| JEL: | C93 D91 I12 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24959&r=cdm |
| By: | Vincent Anesi (University of Nottingham, School of Economics) |
| Abstract: | This paper develops a dynamic model of legislative policy making with evolving, privately observed policy preferences. Our goal is to find conditions under which decision rules, which assign feasible policies based on the legislators' preferences, are sustainable in the long run. We show that under some mild conditions, every decision rule that would be implementable with monetary transfers can be approximately sustained in a perfect Bayesian equilibrium of the dynamic model. In this equilibrium, the legislators receive payoffs arbitrarily close to those they would obtain if they could commit ex ante to truthfully apply the decision rule in every period. An application of our result yields a dynamic issue-by-issue median voter theorem in the vein of Baron's (1996) for a spatial framework with incomplete information. |
| Keywords: | Committee voting, Information, Legislative bargaining, Sustainability |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2018-08&r=cdm |