nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒03‒24
seven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political Polarization By Dixit, Avinash; Weibull, Jörgen
  2. On the Possibility of Political Change – Outcomes in Between Local and Global Equilibria By Olovsson, Conny; Roine, Jesper
  3. Political labor market, government policy, and stability of a non-democratic regime By Lazarev, Valery
  4. The single-mindedness of labor unions when transfers are not Lump-Sum By canegrati, emanuele
  5. Democracy and Foreign Education By Antonio Spilimbergo
  6. Influence Indices By Agnieszka Rusinowska; Michel Grabisch
  7. The not-preference-based Hoede-Bakker index By Agnieszka Rusinowska

  1. By: Dixit, Avinash (Princeton University); Weibull, Jörgen (Dept. of Economics, Stockholm School of Economics)
    Abstract: Failures of government policies often provoke opposite reactions from citizens; some call for a reversal of the policy while others favor its continuation in stronger form. We offer an explanation of such polarization, based on a natural bimodality of preferences in political and economic contexts, and consistent with Bayesian rationality.
    Keywords: polarization; voting; information
    JEL: D72 D74 D81 D82
    Date: 2006–08–22
  2. By: Olovsson, Conny (Dept. of Economics, Stockholm School of Economics); Roine, Jesper (SITE)
    Abstract: We study voting over education subsidies where poor individuals may be excluded and the rich may chose private alternatives. With plausible changes of the standard game we show that this problem typically has multiple equilibria; one with low taxes, many excluded, and many in private schooling; another with high taxes, everyone in schooling, and few choosing the private alternative. Shifts between these equilibria can only happen through jumps in policy, not through gradual change. The method we develop identifies the global, as well as all local majority rule equilibria, and it characterizes "stability regions" around each local equilibrium. Introducing costs into the political system can make the local equilibria the globally stable outcome which, for example, implies that identical countries with different starting points could end up with completely different redistributive systems. Outcomes change in intuitive ways with the parameters and several insights with respect to the possibilities of political change seem general for problems of redistribution with excludability.
    Keywords: political economy; political equilibrium; voting; redistribution; education subsidies; local equilibrium; non-median voter equilibrium
    JEL: D72 H20
    Date: 2007–02–16
  3. By: Lazarev, Valery
    Abstract: An important source of stability of a hierarchical non-democratic political regime, such as that of the Soviet Union in the past or China today, is the rulers’ ability to buy the services and political support of activists recruited from the working population in the monopsonistic political labor market. Implicit contracts that underlie this exchange require retirement of incumbents to allow for deferred promotion of activists into rent-paying positions. An analysis of optimal promotion contracts shows that regime stability is consistent with a high income gap between the rulers and the working population, strengthened when government pursues an active investment policy, and not affected positively by government spending on public goods. Predictions of the promotion contract model are tested using Soviet data for the period 1956 to 1968.
    Keywords: non-democracy; political rents; hierarchy; promotion incentives; implicit contract
    JEL: P26 J45 D70
    Date: 2007–03–16
  4. By: canegrati, emanuele
    Abstract: In this paper I analyse a labour market where the wage is endogenously determined according to an Efficient Bargaining process between a firm and a labour union whose members are partitioned into two social groups: the old and the young. Furthermore, I exploit the Single-Mindedness theory, which considers the existence of a density function which endogenously depends on leisure. I demonstrate that, when preferences of one group for leisure are higher than those of the other group the latter suffers from higher tax rates and with lower level of wage rates and lower levels of leisure. Finally, since the former is more single-minded, it may exploit its greater political power in order to get a positive intergenerational transfer which takes place via labour income taxation. Empirical evidence from the WERS 2004 survey confirms main results of the model.
    Keywords: bargaining models; labour unions; labour-income taxation; single-mindedness
    JEL: H23 D11 J23 H61 J21 J18 J26 D74 J52 J58 D72 J22 H21 D63 I38 J51 H31 D91 D78 H24 H55 J11 J14
    Date: 2007–03–19
  5. By: Antonio Spilimbergo
    Abstract: Do foreign-educated individuals play a role in promoting democracy in their home countries? Despite the large amount of private and public resources spent on foreign education, there is no systematic evidence that foreign-educated individuals foster democracy in their home countries. Using a unique panel dataset on foreign students starting from 1950, I show that, indeed, foreign-educated individuals promote democracy in their home country, but only if the foreign education is acquired in democratic countries. The results are robust to reverse causality, country-specific omitted variables, and inclusion of a variety of control variables. The results are stronger for small countries.
    Keywords: Education , democracy , development , institutions , international students , Education , Governance ,
    Date: 2007–03–08
  6. By: Agnieszka Rusinowska (GATE CNRS); Michel Grabisch (Université Paris I Panthéon-Sorbonne, CERMSEM)
    Abstract: In the paper, we investigate the Hoede-Bakker index - the notion which computes the overall decisional ‘power’ of a player in a social network. It is assumed that each player has an inclination (original decision) to say ‘yes’ or ‘no’ which, due to influence of other players, may be different from the final decision of the player. The main drawback of the Hoede-Bakker index is that it hides the actual role of the influence function, analyzing only the final decision in terms of success and failure. In this paper, we further investigate the Hoede-Bakker index, proposing an improvement which fully takes into account the mutual influence among players. A global index which distinguishes an influence degree from a ‘power’ index is analyzed. We define weighted influence indices, in particular, a possibility influence index which takes into account any possibility of influence, and a certainty influence index which expresses certainty of influence. We consider different influence functions and study their properties.
    Keywords: Hoede-Bakker index, influence function, influence indices
    JEL: C7 D7
    Date: 2007–03
  7. By: Agnieszka Rusinowska (GATE CNRS)
    Abstract: The paper concerns a certain modification of the generalized Hoede-Bakker index - a notion defined for a social network of players. In the original Hoede-Bakker set up, preferences of players are involved. It is assumed that a player has an inclination either to accept or to reject a proposal, but due to the influence of others, his final decision may be different from his original inclination. In this paper, we propose the not-preference-based (NPB) generalized Hoede-Bakker index, where feasible strategies instead of players’ inclinations are considered. We show that if all feasible strategy profiles are equally probable, then the NPB generalized Hoede-Bakker index is a ‘net’ Success, i.e., ‘Success - Failure’, where Success and Failure of a player is defined as the probability that the player is successful and fails, respectively. Moreover, under the assumption of equal probabilities of all feasible strategy profiles, we show that the probability that a player is lucky (Luck) equals the probability that he fails (Failure). Since Success - Luck = Decisiveness, it follows that, under the same assumption, the NPB generalized Hoede-Bakker index is equal to the probability that a player is decisive.
    Keywords: Hoede-Bakker index, feasible strategy, success, failure, decisiveness
    JEL: C7 D7
    Date: 2007–03

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