nep-pol New Economics Papers
on Positive Political Economics
Issue of 2005‒04‒30
seven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Regional Grants as Pork Barrel Politics By Kevin Milligan; Michael Smart
  2. Inequality and Relative Reliance on Tariffs: Theory and Evidence By Margarita Katsimi; Thomas Moutos
  3. Lobbying and Compromise By Gil S. Epstein; Shmuel Nitzan
  4. When the Union Hurts the Workers: A Positive Analysis of Immigration Policy By Giorgio Bellettini; Carlotta Berti Ceroni
  5. Legislative Malapportionment and the Politicization of Germany’s Intergovernmental Transfer System By Hans Pitlik; Friedrich Schneider; Harald Strotmann
  6. Voice of the Diaspora: An Analysis of Market Voting Behaviour By Orla Doyle; Jan Fidrmuc
  7. Who is in Favour of Enlargement? Determinants of Support for EU Membership in the Candidate's Countries Referenda By Orlagh Doyle; Jan Fidrmuc

  1. By: Kevin Milligan; Michael Smart
    Abstract: We investigate the political and economic factors influencing the allocation of regional development grants for a panel of Canadian electoral districts in the 1988-2001 period. In a strong party system such as Canada’s, models of political competition predict little role for individual legislators, as party leaders allocate resources to maximize party success. While spending is targeted toward some “swing” districts, we do also find it is higher in districts represented by members of the government party, especially those in the federal Cabinet, and those of lower seniority. We develop a model featuring bargaining over legislative and non-legislative favours that is consistent with the evidence.
    JEL: D72 H25 R58
    Date: 2005
  2. By: Margarita Katsimi; Thomas Moutos
    Abstract: In this paper we construct a Ricardian model of trade in vertically-differentiated products between a developing country and the (developed) rest of the world. Despite labour being the only factor of production in this model, tariffs (in addition to income taxes) have distributional consequences because the high-quality imported varieties are consumed only by high-income households. The model predicts a U-shaped relationship between income inequality and the median-voter’s preferred reliance on tariffs versus income taxes in order to effect the desired redistribution. Using data from 44 countries we test for the existence of this U-shaped relationship by estimating a cross-sectional regression relating the ratio of the tariff rate over the tax rate to inequality and a set of control variables such as GDP per capita, openness, the degree of democracy and area dummies. We find that the model’s predictions are supported by the data.
    Keywords: inequality, tariffs, median-voter, trade, vertical differentiation
    JEL: F13 H23
    Date: 2005
  3. By: Gil S. Epstein; Shmuel Nitzan
    Abstract: The compromise enhancing effect of lobbying on public policy has been established in two typical settings. In the first, lobbies are assumed to act as 'principals' and the setters of the policy (the candidates in a Downsian electoral competition or the elected policy maker in a citizen- candidate model of electoral competition) are conceived as 'agents'. In the second setting, the proposed policies are solely determined by the lobbies who are assumed to take the dual role of 'principals' in one stage of the public-policy game and 'agents' in its second stage. The objective of this paper is to demonstrate that in the latter setting, the compromising effect of lobbying need not exist. Our reduced-form, two-stage public-policy contest, where two interest groups compete on the approval or rejection of the policy set by a politician, is sufficient to show that the proposed and possibly implemented policy can be more extreme and less efficient than the preferred policies of the interest groups. In such situations then more than the calf (interest groups) wish to suck the cow (politician) desires to suckle thereby threatening the public well being more than the lobbying interest groups. The main result specifies the conditions that give rise to such a situation under both the perfectly and imperfectly discriminating contests.
    Keywords: public-policy contests, interest groups, policy makers, lobbying, compromise
    JEL: D60 D72
    Date: 2005
  4. By: Giorgio Bellettini; Carlotta Berti Ceroni
    Abstract: This paper studies the determinants of immigration policy in an economy with entrepreneurs and workers where a trade union has monopoly power over wages. The presence of the union leads a benevolent government to implement a high level of immigration and induces a welfare loss not only from an aggregate point of view, but even from the point of view of workers. In the politico-economic equilibrium where interest groups lobby for immigration, we show the condition under which workers are no longer hurt by the presence of the union.
    JEL: F22 J51 J61
    Date: 2005
  5. By: Hans Pitlik; Friedrich Schneider; Harald Strotmann
    Abstract: Legislative bargaining theory suggests that fiscal transfers among member states of a federation are determined to a substantial degree by political bargaining powers. Malapportionment of the states' population in the legislature is claimed to lead to disproportionally higher benefits to overrepresented states. The present paper analyses empirically the distribution of fiscal transfers in Germany's intergovernmental transfer system over the period 1970-2002. It can be shown that overrepresented states in the upper house receive disproportionate shares of transfers, while malapportionment in the lower house does not seem to matter. We also find empirical evidence that overrepresentation became more important over time.
    Keywords: legislative bargaining, overrepresentation, fiscal transfer system, Germany
    JEL: D70 H77
    Date: 2005
  6. By: Orla Doyle; Jan Fidrmuc
    Abstract: This paper utilizes a unique dataset on votes cast by Czech and Polish migrants in their recent national elections to investigate the impact of institutional, political and economic characteristics on migrants’ voting behavior. The political preferences of migrants are strikingly different from those of their domestic counterparts. In addition, there are also important differences among migrants living in different countries. This paper examines three alternative hypotheses to explain migrant voting behavior: adaptive learning;economic self-selection and political self-selection. The results of the analysis suggest that migrant voting behavior is affected by the institutional environment of the host countries, in particular the tradition of democracy and the extent of economic freedom. In contrast, there is little evidence that differences in migrants’ political attitudes are caused by self-selection based either on economic motives or political attitudes prior to migrating. These results are interpreted as indicating that migrants’ political preferences change in the wake of migration as they adapt to the norms and values prevailing in their surroundings. Classification-
    Keywords: Voting, elections, migration, political resocialization, transition.
    Date: 2005–04–20
  7. By: Orlagh Doyle; Jan Fidrmuc
    Abstract: This paper investigates both the macro and micro determinants of EU support as expressed in the 2003 referenda on EU membership and the 2002 Candidate Countries Eurobarometer survey data. It is found that favourable individual and regional characteristics, i.e., the “winners” of the transition process, are positively correlated with support for accession and voter participation. In contrast, those who should benefit from future EU transfers, i.e., the “losers” of the process, are less likely to vote and/or support EU membership. It is therefore argued that voters in the new member states assign greater weight on future benefits from liberalization and integration than on potential gains through redistribution. Classification-
    Keywords: Financial integration, capital flows, external assets and liabilities
    Date: 2005–04–20

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