nep-pol New Economics Papers
on Positive Political Economics
Issue of 2005‒08‒13
27 papers chosen by
Eugene Beaulieu
University of Calgary

  1. Why Do Politicians Delegate? By Alberto Alesina; Guido Tabellini
  2. Land, Violent Conflict and Development By Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte; Nicolas Pons-Vignon
  3. Rent-Seeking Bureaucracies in a Schumpeterian Endogenous Growth Model : Effects on Human Capital Accumulation, Inequality and Growth By Luca, SPINESI
  4. Corruption And The Provision Of Public Output In A Hierarchical Asymmetric Information Relationship By Sanjit Dhami; Ali al-Nowaihi
  5. The Killing Game: Reputation and Knowledge in Non-Democratic Succession By Egorov, Georgy; Sonin, Konstantin
  6. Divided We Stand, United We Fall: The Hume-Weber-Jones Mechanism for the Rise of Europe By Cem Karayalcin
  7. Voting Transparency in a Monetary Union By Gersbach, Hans; Hahn, Volker
  8. The Governance of Occupational Pension Funds and the Politico- Economic Implications: The Case of Austria By Stefan W. Schmitz
  9. More Income Equality or Not? An Empirical Analysis of Individuals’ Preferences By María A. García-Valiñas; Roberto Fernández Llera; Benno Torgler
  10. Optimal Distribution Of Powers In A Federation: A Simple, Unified Framework By Sanjit Dhami
  11. Earthquake fatalities: the interaction of nature and political economy By Nejat Anbarci; Monica Escaleras; Charles A. Register
  12. Decentralization and Electoral Accountability: Incentives, Separation and Voter Welfare By Hindricks, Jean; Lockwood, Ben
  13. Endogenous Globalization and Income Divergence By Yoshiaki Sugimoto
  14. Decentralization and Electoral Accountability: Incentives, Separation, and Voter Welfare By Jean Hindriks; Benjamin Lockwood
  15. Sustaining Social Security By Martín Gonzalez-Eiras; Dirk Niepelt
  16. Costly Revenue-Raising and the Case for Favoring Import-Competing Industries By Xenia Matschke
  17. When Winning is the Only Thing: Pure Strategy Nash Equilibria in a Three-Candidate Spatial Voting Model By Richard A. Chisik; Robert J. Lemke
  18. The Political Economy of Seigniorage By Ari Aisen; Francisco José Veiga
  19. Political Competition and Economic Performance: Theory and Evidence from the United States By Besley, Timothy; Persson, Torsten; Sturm, Daniel
  20. "Romes without Empires": Primate Cities, Political Competition, and Economic Growth By Cem Karayalcin
  21. Trade and the Distribution of Human Capital By Spiros Bougheas; Raymond Riezman
  22. A Simple Scheme to Improve the Efficiency of Referenda By Casella, Alessandra; Gelman, Andrew
  23. On Government Centralization and Fiscal Referendums: A Theoretical Model and Evidence from Switzerland By Lars P. Feld; Christoph A. Schaltegger; Jan Schnellenbach
  24. Who is against Free Migration? Lobbying, the Non-traded Sector and the Choice between the Customs Union and the Common Market By Cyrille Schwellnus
  25. Making Statements and Approval Voting By Enriqueta Aragones; Itzhak Gilboa; Andrew Weiss
  26. Political Business Cycles in Local Employment By Cesar Alberto Campos Coelho; Francisco José Veiga; Linda Gonçalves Veiga
  27. Attitude-Dependent Altruism, Turnout and Voting By Rotemberg, Julio

  1. By: Alberto Alesina; Guido Tabellini
    Abstract: Opportunistic politicians maximize the probability of reelection and rents from office holding. Can it be optimal from their point of view to delegate policy choices to independent bureaucracies? The answer is yes: politicians will delegate some policy tasks, though in general not those that would be socially optimal to delegate. In particular, politicians tend not to delegate coalition forming redistributive policies and policies that create large rents or effective campaign contributions. Instead they prefer to delegate risky policies to shift risk (and blame) on bureaucracies.
    Date: 2005–08
  2. By: Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte; Nicolas Pons-Vignon
    Abstract: <P>Land dynamics are context specific and rapidly changing, and conflicts related to them do not systematically escalate into violence. One way of framing the discussion is to consider change in the structures of power governing the management of resources in rural areas as necessary to achieve greater efficiency and equity. Since such change will be opposed by beneficiaries of the system in place, the transformation of agriculture is bound to be marred by conflicts of various intensity levels. At the heart of these conflicts lies land because of its very high material <I>and</I> symbolic values. Evidence shows that (a) whether they result from pre-existing agrarian tensions or not, conflict situations in rural societies deeply affect the politics of land, and (b) whether it is at the heart of a conflict or gets dragged into it, land requires a careful approach by policy makers because it is a central element in the evolution of societies. As a result, policies pertaining to land can ...</P> <P>Les dynamiques foncières sont en mutation permanente et s’inscrivent dans des contextes spécifiques. S’il est vrai qu’elles provoquent des conflits, ceux-ci ne deviennent pas systématiquement violents. Pour mieux comprendre les liens entre terre et conflit, on peut s’intéresser aux structures de pouvoir qui gouvernent la gestion des ressources naturelles : leur transformation est en effet une étape nécessaire à l’amélioration de l’efficacité économique de l’agriculture et à la réduction des inégalités. Parce qu’elle menace les intérêts dominants, une telle transformation provoque toujours des conflits d’intensité variable. Or la question foncière est au coeur de ces conflits, à cause des valeurs économique et symbolique attachées à la terre. A cet égard, deux enseignements peuvent être retenus : d’une part, quelle que soit leur origine, les conflits dans les sociétés rurales affectent profondément les systèmes fonciers ; d’autre part, qu’elles soient à l’origine du conflit ou ...</P>
    Date: 2004–02
  3. By: Luca, SPINESI
    Abstract: Some empirical works from the nineties have shown the existence of a negative relationship between inequality and growth. In this paper I show that the inefficiency of the Public Sector due to agency problems can be a new element that must e considered to explain the negative empirical relationship between inequality and growth. Considering a neo-Schumpeterian endogenous growth model, I envisage the relationship between rent-seeking bureaucracies and both the private market and political authority. I show that the inefficiency of the Public Sector can contribute to widening income inequality and reducing the per-capita output growth rate because of the skills waste in oversight of rent-seeking bureaucracies. Therefore bureaucratic quality can contribute to explaining the long-run negative relationship between inequality and growth. I show that these effects operates mostly in developed countries, where human capital accumulation and technological progress are fundamental engines for growth. Moreover, I show that more costly oversight reduces the consume of each existing product.
    Keywords: technological progress; inequality and growth; asymmetric information; rent-seeking bureaucracies
    JEL: D31 D82 H42 O30
    Date: 2005–02–15
  4. By: Sanjit Dhami; Ali al-Nowaihi
    Abstract: This paper develops a hierarchical principal-agent model to explore the influence of corruption, bribery, and politically provided oversight of production on the efficiency and level of output of some publicly provided good. Under full information, an honest politician acheives the first best while a dishonest politician creates shortages and bribes. Under asymmetric information, however, an honest politician might create more shortages relative to a dishonest one, although, the latter creates greater bribes. Furthermore, the contracted output can be greater or smaller relative to that produced by an unregulated private monopolist. The model identifies a tradeoff between bribery and allocative efficiency. This helps to reconcile some conflicting results on the implications of corruption for the size of the public sector and provides new results on the circumstances under which an improvement in the auditing technology is beneficial. Relative to the static case, in the dynamic renegotiation-proof equilibrium, shortages fall but bribes can increase or decrease, raising important issues of the choice between long-term and short-term contracts.
    Keywords: Corruption; Regulation; Asymmetric Information; Renegotiation-Proofness
    JEL: D82 D78 L51
    Date: 2005–07
  5. By: Egorov, Georgy; Sonin, Konstantin
    Abstract: The winner of a battle for a throne can either execute or spare the loser; if the loser is spared, he contends the throne in the next period. Executing the losing contender gives the winner an additional quiet period, but then his life is at risk if he loses to some future contender who might be, in equilibrium, too frightened to spare him. The trade-off is analysed within a dynamic complete information game, with, potentially, an infinite number of long-term players. In an equilibrium, decisions to execute predecessors are history-dependent. With a dynastic rule in place, incentives to kill the predecessor are much higher than in non-hereditary dictatorships. The historical part of our analytic narrative contains a detailed analysis of two types of non-democratic succession: hereditary rule of the Osmanli dynasty in the Ottoman Empire in 1281–1922, and non-hereditary military dictatorships in Venezuela in 1830–1964.
    Keywords: dictatorship; economic history; positive political theory; succession
    JEL: C73 D72 N40
    Date: 2005–06
  6. By: Cem Karayalcin (Department of Economics, Florida International University)
    Abstract: The "great divergence" in incomes between Europe and the rest of the world occurred relatively recently. Why was it that Western Europe, once a backward outpost on the fringes of the Eurasian continent, able to dominate in terms of income and technology the previously successful Eastern economies? Several mechanisms have been identifed to account for the rise of Europe. This paper formalizes one important mechanism, the intellectual origins of which can be traced back to Hume and Weber and which was fully, though informally, articulated by E.L. Jones. This mechanism emphasizes the contrast between the European states-system and the Eastern empires. Political competition for a mobile tax-base in a states-system forces rulers to expropriate less from their subjects and to supply relatively more "public services". By effectively limiting the "exit" options of the ruled, an empire rewards its ruler with a captive tax-base that can be subjected to relatively higher levels of expropriation without a similar rise in "public services" provided. The states-system thus encourages higher levels of capital accumulation, while the empire stifles it. The successes of the Eastern empires in their consolidation phase are due to the competition they initially faced from neighboring states. Since Europe escaped such consolidation, the process of accumulation there never faced the impediments its Eastern counterparts did. The paper, thus, also provides a structural explanation for the emergence of institutions in Europe that led to relatively secure property rights.
    Keywords: public goods, inequality, redistribution, political economy
    JEL: O4 P5
    Date: 2005–07
  7. By: Gersbach, Hans; Hahn, Volker
    Abstract: We examine whether the central bank council of a monetary union should publish its voting records when members are appointed by national politicians. We show that the publication of voting records lowers overall welfare if the private benefits of holding office are sufficiently low. High private benefits of central bankers lower overall welfare under opacity, as they induce European central bankers to care more about being re-appointed than about beneficial policy outcomes. We show that opacity and low private benefits jointly guarantee the optimal welfare level. Moreover, we suggest that non-renewable terms for national central bankers and delegating the appointment of all council members to a European agency would be desirable.
    Keywords: central banks; transparency voting
    JEL: D70 E58
    Date: 2005–07
  8. By: Stefan W. Schmitz
    Abstract: This paper analyses the efficacy of the governance structure of occupational pension funds (Pensionskassen – PKs) in Austria. Based on the results of the analysis, it further investigates the politico- economic implications for the political and legislative process regarding recent changes to the relevant Act (Pensionskassengesetz – PKG). The first section explains the exclusion of the beneficiaries’ interests from the institutional interest of the PKs’ association, i.e. the distribution of power, by the underlying governance structure of PKs. This section focuses on the structural conflict of interest PKs face, namely between their beneficiaries and their shareholders (almost exclusively large Austrian banks and insurance companies). The institutional interests of PKs are determined by the governance structure at the micro and meso levels and the interests of the stakeholders, in particular those of the shareholders, while the governance structure is treated as given. The second section focuses on the empirical investigation of the politico-economic impact of the findings in the first section. It analyses the role of the PKs and in particular the PK association (Fachverband der Pensionskassen) in the political process in a case study. It argues that the repercussions of the governance structure at the micro and meso levels on the political level can result in a vicious circle for beneficiaries and that the political risks associated with long-term guarantees for beneficiaries of occupational pension funds are substantial and aggravated by the governance structure at the micro and meso level. It employs an actor- centred institutionalism.
    Keywords: Pension Funds, Governance,Positive Analysis of Policy-Making and Implementation, Law and Economics
    JEL: D G G K
    Date: 2005–08–02
  9. By: María A. García-Valiñas; Roberto Fernández Llera; Benno Torgler
    Abstract: Do people prefer a society with an extensive social welfare system with high taxes, or low taxes but lax redistributive policies? Although economists have for a long time investigated the trade-off mechanism between equity and efficiency, surprisingly little information is available about citizens’ preferences over the distribution of income in a society. The aim of this paper is reduce this shortcoming, investigating in an empirical study working with World Values Survey, what shapes individuals’ preferences for income equality in Spain. We present evidence that not only traditional economic variables are relevant to be considered, but also factors such as ideology, political interest, fairness perception about others or trust in institutions, are key determinants to understand preferences towards redistribution and equality.
    Keywords: redistribution; inequality; welfare state; social capital
    JEL: H23 H53 I31
    Date: 2005–07
  10. By: Sanjit Dhami
    Abstract: In a federation with n >= 2 regions the relative optimality of six regimes- autarky, centralization, unregulated devolution, regulated devolution, direct democracy, and revenue maximising leviathan, is examined. Public policy consists of redistribution and regional public good provision. Regional incomes are uncertain and correlated while estimates of the usefulness of regional public goods are uncertain; the federal government’s estimates are noisier relative to those of regional governments. The optimality of each regime is influenced by four margins- regional insurance, coarseness of federal information, internalisation of spillovers and ‘raiding the commons’. Regulated devolution is the only regime that is capable of producing the constrained first best level of public goods. Federal insurance under the two regimes of direct democracy and a federal leviathan, can be inadequate relative to that under a utilitarian federal government. An increase in the number of regions has important implications for insurance and raiding the commons. The median region’s choice of redistribution under direct democracy is influenced in important ways by the distribution of regional uncertainties. The paper synthesises a significant proportion of the existing literature in a single model and also provides several new results.
    Keywords: Insurance; Spillovers; Information; Raiding the commons; Uncertainty
    JEL: H77 D78 H41
    Date: 2005–08
  11. By: Nejat Anbarci (Department of Economics, Florida International University); Monica Escaleras (Department of Economics and Finance, College of Charleston); Charles A. Register (Department of Economics, Florida Atlantic University)
    Abstract: In our theoretical model, we show that as per capita income decreases and the level of inequality increases, different segments of society are less likely to agree on the distribution of the burden of the necessary collective action, causing the relatively-wealthy simply to self-insure against the disaster while leaving the relatively-poor to its mercy. We then evaluate 269 large earthquakes occurring worldwide (1960-2002), taking into account other factors such as an earthquake's magnitude, depth and proximity to population centers. Using a Negative Binomial estimation strategy with both random and fixed estimators, we find strong evidence of the theoretical model’s predictions.
    Keywords: Earthquake, Fatalities, Nature, Political economy
    JEL: D31 H41 P16
    Date: 2004–06
  12. By: Hindricks, Jean; Lockwood, Ben
    Abstract: This paper studies the relationship between fiscal decentralization and electoral accountability, by analysing how decentralization impacts upon incentive and selection effects, and thus on voter welfare. The model abstracts from features such as public good spillovers or economies of scale, so that absent elections, voters are indifferent about the fiscal regime. The effect of fiscal centralization on voter welfare works through two channels: (i) via its effect on the probability of pooling by the bad incumbent; (ii) conditional on the probability of pooling, the extent to which, with centralization, the incumbent can divert rents in some regions without this being detected by voters in other regions (selective rent diversion). Both these effects depend on the information structure; whether voters only observe fiscal policy in their own region, in all regions, or an intermediate case with a uniform tax across all regions. More voter information does not necessarily raise voter welfare, and under some conditions, voter would choose uniform over differentiated taxes ex ante to constrain selective rent diversion.
    Keywords: accountability; Elections; fiscal decentralization
    JEL: D72 D73 H41
    Date: 2005–07
  13. By: Yoshiaki Sugimoto
    Abstract: This paper develops a growth theory that accounts for the evolution of trade policy, underlying internal class conflicts, and global income divergence over the last few centuries. By analyzing political responses to the distributional effects of international trade, this paper finds a prominent interaction between trade policy and the pattern of economic development, and suggests that the nature of the interaction depends on a country's resource abundance and distribution. As shown by the example of Western Europe, land-scarce countries will reach a developed stage through a non-monotonic evolution of trade policy. In contrast, land-abundant countries, especially those with concentrated landownership, tend to fail to take o¤ because of landlords' opposition to industrialization.
    Keywords: Trade Policy, Growth, Class Conflict
    JEL: F10 F13 F43 O11 O40
    Date: 2005
  14. By: Jean Hindriks; Benjamin Lockwood
    Abstract: This paper studies the relationship between fiscal decentralization and electoral accountability, by analyzing how decentralization impacts upon incentive and selection effects, and thus on voter welfare. The model abstracts from features such as public good spillovers or economies of scale, so that absent elections, voters are indifferent about the fiscal regime. The effect of fiscal centralization on voter welfare works through two channels: (i) via its effect on the probability of pooling by the bad incumbent; (ii) conditional on the probability of pooling, the extent to which, with centralization, the incumbent can divert rents in some regions without this being detected by voters in other regions (selective rent diversion). Both these effects depend on the information structure: whether voters only observe fiscal policy in their own region, in all regions, or an intermediate case with a uniform tax across all regions. More voter information does not necessarily raise voter welfare, and under some conditions, voters would choose uniform over differentiated taxes ex ante to constrain selective rent diversion.
    JEL: D72 D73 H41
    Date: 2005
  15. By: Martín Gonzalez-Eiras; Dirk Niepelt
    Abstract: This paper analyzes the sustainability of intergenerational transfers in politico-economic equilibrium. Embedding electoral competition for the votes of old and young households in the standard Diamond (1965) OLG model, we find that intergenerational transfers naturally arise in a Markov perfect equilibrium, even in the absence of altruism, commitment, or trigger strategies. Not internalizing the negative effects of transfers for future generations, the political process partially resolves the distributive conflict between old and young voters by shifting some of the cost of social security to the unborn. As a consequence, transfers in politico-economic equilibrium are higher than what is socially optimal. Standard functional form assumptions yield closed-form solutions for the politico-economic equilibrium as well as the equilibrium supported by the Ramsey policy. The model predicts population ageing to lead to larger social security systems, but eventually lower benefits per retiree. Under realistic parameter values, it predicts a social-security tax rate close to the actual one, but higher than the Ramsey tax rate. Closed-form solutions for the case with endogenous labor supply, tax distortions, and multiple policy instruments prove the results to be robust.
    Keywords: social security, intergenerational transfers, probabilistic voting, Markov perfect equilibrium, saving, labor supply
    JEL: E62 H55
    Date: 2005
  16. By: Xenia Matschke
    Abstract: A standard finding in the political economy of trade policy literature is that we should expect export-oriented industries to attract more assistance than import-competing industries. In reality, however, trade policy is heavily biased toward supporting import industries. This paper shows within a standard protection for sale framework, how the costliness of raising revenue via taxation may make export subsidies less desirable and import tariffs more desirable. The model is then estimated and its predictions are tested using U.S. tariff data. An empirical estimate of the costliness of revenue-raising is also obtained.
    Keywords: protection for sale, tariffs, trade protection
    JEL: F13 F16
    Date: 2005
  17. By: Richard A. Chisik (Department of Economics, Florida International University); Robert J. Lemke (Department of Economics and Business, Lake Forest College)
    Abstract: It is well-known that there are no pure strategy Nash equilibria (PSNE) in the standard three-candidate spatial voting model when candidates maximize their share of the vote. When all that matters to the candidates is winning the election, however, we show that PSNE do exist. We provide a complete characterization of such equilibria and then extend our results to elections with an arbitrary number of candidates. Finally, when two candidates face the potential entrant of a third, we show that PSNE no longer exist, however, they do exist when the number of existing candidates is at least three.
    Keywords: Voting, spatial equilibrium, location models, entry
    JEL: C7 D0 H8 R1
    Date: 2004–04
  18. By: Ari Aisen (International Monetary Fund); Francisco José Veiga (Universidade do Minho - NIPE)
    Abstract: While most economists agree that seigniorage is one way governments finance deficits, there is less agreement about the political, institutional and economic reasons for relying on it. This paper investigates the main determinants of seigniorage using panel data on about 100 countries, for the period 1960-1999. Estimates show that greater political instability leads to higher seigniorage, especially in developing, less democratic and socially-polarized countries, with high inflation, low access to domestic and external debt financing and with higher turnover of central bank presidents. One important policy implication of study is the need to develop institutions conducive to greater economic freedom as a means to lower the reliance on seigniorage financing of public deficits. Classification-JEL: E31, E63.
    Keywords: Seigniorage, political instability, institutions.
    Date: 2005
  19. By: Besley, Timothy; Persson, Torsten; Sturm, Daniel
    Abstract: One of the most cherished propositions in economics is that market competition by and large raises consumer welfare. But whether political competition has similarly virtuous consequences is far less discussed. This paper formulates a model to explain why political competition may enhance economic performance and uses the United States as a testing ground for the model's implications. It finds statistically robust evidence that political competition has quantitatively important effects on state income growth, state policies, and the quality of Governors.
    Keywords: economic growth; political competition; US south; voting restrictions
    JEL: D72 H11 H70 N12 O11
    Date: 2005–07
  20. By: Cem Karayalcin (Department of Economics, Florida International University)
    Abstract: Many developing economies are characterized by the dominance of a super metropolis. The coexistence of a primate city with a low level of economic development is not an accident, the former being symptomatic of the causes of the latter. Taking historical Rome as the archetype of a city that centralizes political power to extract resources from the rest of the country, we develop two models of rent-seeking and expropriation which illustrate different mechanisms that relate political competition to economic outcomes. The "voice" model shows that rent-seeking by di?erent interest groups (localized in different specialized cities/regions) will lead to low investment and growth when the number of these groups is low. Increased political competition in the form of more organized groups engaged in countervailing activity leads to more secure property rights and higher growth. The "exit" model allows political competition among those with political power (to tax or expropriate from citizens) over a footloose tax base. It shows that when this power is centralized, tax rates would be higher and growth rates lower. When political power is decentralized across different self-interested rulers in diverse jurisdictions, the competition over the mobile resources leads to lower tax/expropriation rates, raising the long-run rate of growth of the economy.
    Keywords: public goods, inequality, redistribution, political economy
    JEL: O4 P5
    Date: 2005–07
  21. By: Spiros Bougheas; Raymond Riezman
    Abstract: We develop a two-country, two-sector model of trade where the only difference between the two countries is their distribution of human capital endowments. We show that even if the two countries have identical aggregate human capital endowments the pattern of trade depends on the properties of the two human capital distributions. We also show that the two distributions of endowments also completely determine the effects of trade on income inequality. Then, we prove that there are long-term gains from trade if the marginal utility of income is constant or as long as losers from trade are compensated by winners. Finally, we look at a simple majority voting model. It turns out depending on the distribution of human capital, autarky and free trade with and without compensation may be the outcome of majority voting.
    Keywords: patterns of trade, income distribution, welfare, political economy
    JEL: F10
    Date: 2005
  22. By: Casella, Alessandra; Gelman, Andrew
    Abstract: This paper proposes a simple scheme designed to elicit and reward intensity of preferences in referenda: voters faced with a number of binary proposals are given one regular vote for each proposal plus an additional number of bonus votes to cast as desired. Decisions are taken according to the majority of votes cast. In our base case, where there is no systematic difference between proposals’ supporters and opponents, there is always a positive number of bonus votes such that ex ante utility is increased by the scheme, relative to simple majority voting. When the distributions of valuations of supporters and opponents differ, the improvement in efficiency is guaranteed only if the distributions can be ranked according to first order stochastic dominance. If they are, however, the existence of welfare gains is independent of the exact number of bonus votes.
    Keywords: majority voting; referenda; voting mechanisms
    JEL: D70 H10 K19
    Date: 2005–06
  23. By: Lars P. Feld; Christoph A. Schaltegger; Jan Schnellenbach
    Abstract: We propose and test a positive model of fiscal federalism in which centralization is less likely to occur in jurisdictions with referendum decisions on policy cen-tralization. Citizens choose centralization of public spending and revenue in order to internalize spillovers if individual preferences in two jurisdictions are suffi-ciently homogeneous. Under representative democracy, centralization is ineffi-ciently high because representatives can extract political rents by policy centrali-zation. Referendums thus restrict representatives’ ability for rent extraction. An empirical analysis using a panel of Swiss cantons from 1980 to 1998 supports the hypothesis that centralization is less likely under referendum decision-making.
    Keywords: Centralization; Fiscal Federalism; Fiscal Referendums
    JEL: H1 H7 D72
    Date: 2005–03
  24. By: Cyrille Schwellnus
    Abstract: While economists usually resort to redistribution between individuals of different skill levels and majority voting when explaining migration policies, the present political economy model of preferential trade and migration agreements suggests an alternative approach based on the following two observations. Firstly, in the presence of free trade in goods between the member states of the EU, migration between the member states mainly redistributes income between individuals employed in the traded and the non-traded sectors. Secondly, various episodes of restrictive migration legislation suggest that lobbying from vocal interest groups rather than majority voting shapes migration policies in the EU.
    Keywords: Trade Negotiations, International Migration, Lobbying, European Enlargement
    JEL: D72 F15 F22
    Date: 2005
  25. By: Enriqueta Aragones (Institut d’Analisi Economica, C.S.I.C.); Itzhak Gilboa (Tel-Aviv University and Cowles Foundation, Yale University); Andrew Weiss (Department of Economics, Boston University)
    Abstract: We assume that people have a need to make statements, and construct a model in which this need is the sole determinant of voting behavior. In this model, an individual selects a ballot that makes as close a statement as possible to her ideal point, where abstaining from voting is a possible (null) statement. We show that in such a model, a political system that adopts approval voting may be expected to enjoy a significantly higher rate of participation in elections than a comparable system with plurality rule.
    Keywords: Approval voting, Abstention, Statements
    JEL: D72
    Date: 2005–08
  26. By: Cesar Alberto Campos Coelho; Francisco José Veiga (Universidade do Minho - NIPE); Linda Gonçalves Veiga (Universidade do Minho - NIPE)
    Abstract: Using employment data for municipalities, we find strong evidence of political business cycles. Employment increases shortly before elections mainly in municipalities where the mayor´s party has a majority of deputies in the municipal assembly and where she is running for reelection. Classification-JEL: D72, H7.
    Keywords: Political business cycles, local governments, employment, Portugal.
    Date: 2005
  27. By: Rotemberg, Julio
    Abstract: This paper presents a goal-oriented model of political participation based on two psychological assumptions. The first is that people are more altruistic towards individuals that agree with them and the second is that people’s well being rises when other people share their personal opinions. By conveying credible information on attitudes, votes give pleasure to individuals who agree with them and thereby confer vicarious utility on voters. Substantial equilibrium turnout emerges with nontrivial voting costs and modest altruism. The model can explain higher turnout in close elections as well as higher turnout by more informed and more educated individuals. For certain parameters, the model predicts that third party candidates will lose votes to more popular candidates, a phenomenon often called strategic voting. For other parameters, the model predicts ‘vote-stealing’ where the addition of a third candidate robs a major candidate of electoral support.
    Keywords: altruism; elections; turnout; voting
    JEL: D64 D72
    Date: 2005–07

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