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on Positive Political Economics |
| By: | Feld, Lars P. (Alfred-Weber-Institute, Ruprecht-Karls-University of Heidelberg); Fischer, Justina A.V. (Dept. of Economics, Stockholm School of Economics); Kirchgaessner, Gebhard (SIAW-HSG, University of St. Gallen) |
| Abstract: | There is an intensive dispute in political economics about the impact of institutions on income redistribution. While the main focus is on comparison between different forms of representative democracy, the influence of direct democracy on redistribution has attracted much less attention. In this paper, employing both a composite index and measures of single institutions, we find that direct democracy is particularly associated with lower welfare spending. Moreover, we estimate a model which explains the determinants of achieved redistribution measured by Gini coefficients using panel data provided by the Swiss Federal Tax Office from 1981 to 1997. While our results indicate that less public funds are used to redistribute income and actual redistribution is lower, inequality is not reduced to a lesser extent in direct than in representative democracies for a given initial income distribution. |
| Keywords: | Income Redistribution; Direct Democracy; Referendums; Initiatives |
| JEL: | D70 D78 H11 H75 I30 |
| Date: | 2007–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0689&r=pol |
| By: | Michalis Drouvelis (School of Economics, University of Nottingham); Maria Montero (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham) |
| Abstract: | Power indices suggest that adding new members to a voting body may affect the balance of power between the original members even if their number of votes and the decision rule remain constant. Some of the original members may actually gain, a phenomenon known as the paradox of new members. We show that the paradox can occur as an equilibrium of a noncooperative bargaining game based on the Baron-Ferejohn (1989) model of legislative bargaining. We implement this game in the laboratory and find empirical support for the paradox. |
| Keywords: | voting, non-cooperative bargaining, power indices, experiments, paradox of new members |
| JEL: | C70 C92 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-13&r=pol |
| By: | Maria Montero (University of Nottingham) |
| Abstract: | Power indices suggest that adding new members to a voting body may increase the power of an existing member, even if the number of votes of all existing members and the decision rule remain constant. This phenomenon is known as the paradox of new members. This paper shows that the paradox has theoretically occurred in the EU using the leading model of legislative bargaining. Furthermore, it is possible for a majority of members to be in favor of enlargement, even if voters are bargaining over a fixed budget. |
| Keywords: | legislative bargaining, weighted voting, power measures, EU enlargement, paradox of new members |
| JEL: | C71 C72 C78 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-12&r=pol |
| By: | Dreher, Axel (Swiss Economic Institute, ETH Zurich); Fischer, Justina AV (Dept. of Economics, Stockholm School of Economics) |
| Abstract: | Using panel data for a maximum of 109 countries over the years 1976-2000, we empirically analyze the impact of decentralization on the occurrence of transnational terror. Taking account of the potential simultaneity between terror and decentralization, our results show that expenditure decentralization robustly reduces the number of terror events in a country, while political decentralization has no impact. |
| Keywords: | Terrorism; Decentralization; Democracy |
| JEL: | D74 H40 H70 |
| Date: | 2007–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0686&r=pol |
| By: | James C. Rockey |
| Abstract: | This paper asks if and how constitutions affect labour market outcomes. This question is motivated by Rodrik (1999), who suggests that 'democracies pay higher wages' and Persson and Tabellini (2003) who provide evidence that constitutions impact on economic outcomes. An empirical analysis using treatment effect estimators and Bayesian Model Averaging provides robust causal evidence that presidential democracies are associated with lower wages, after controlling for other potential determinants such as the level of income per capita. |
| Keywords: | Democracy, Constitutions, Wages, Factor Shares, Bayesian Model Averaging |
| JEL: | P16 J31 C11 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:07/600&r=pol |
| By: | Fischer, Justina A.V. (Dept. of Economics, Stockholm School of Economics) |
| Abstract: | Empirical analyses for the US suggest that stronger people’s control over the school budget is deleterious to student performance. Using Swiss data on ninth graders in mathematics, reading and natural science collected jointly with the PISA study 2000, this paper tests this hypothesis for Switzerland, exploiting inter-cantonal variation in political institutions. For both student performance in reading and mathematics, stronger popular rights appear to lower educational achievement through the school budget channel. In particular, the qualification of teachers is identified as most influential determinant of student achievement, which is shown to be linked to educational spending. |
| Keywords: | Direct democracy; public finance; economics of education; PISA |
| JEL: | H10 H41 I28 |
| Date: | 2007–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0688&r=pol |
| By: | Svetlana Andrianova; Panicos Demetriades; Chenggang Xu |
| Abstract: | This paper contributes to the finance-growth literature by examining the political economy origins of some of the most successful financial markets in Europe and Asia. It provides historical evidence from London, Amsterdam and Hong Kong that highlights the essential role played by the government sector in kick-starting financial development. We show that the emergence of financial systems did not occur through laissez-faire approaches and that secure property rights alone were not sufficient for financial development. In the cases of London and Amsterdam, governments created large trade monopolies which were responsible for all the major financial innovations of the time. In the case of Hong Kong, where the financial developmentmodel was bank-based, large banking monopolies with close links to the state were created. We argue that the three examples are not special cases and the role of government in the early stages of financial development has been widespread world-wide. |
| Keywords: | Monopoly; politics; institutions; finance |
| JEL: | G18 N20 O16 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:08/1&r=pol |
| By: | Eli Berman; David D. Laitin |
| Abstract: | Can rational choice modeling explain why Hamas, Taliban, Hezbollah and other radical religious rebels are so lethal? The literature rejects theological explanations. We propose a club framework, which emphasizes the function of voluntary religious organizations as efficient providers of local public goods in the absence of government provision. The sacrifices religious clubs require are economically efficient (Iannaccone (1992)), making them well suited for solving the extreme principal-agent problems faced by terrorist and insurgent organizations. Thus religious clubs can be potent terrorists. That explanation is supported by data on terrorist lethality in the Middle East. The same approach explains why religious clubs often choose suicide attacks. Using three data sources spanning a half century, and comparing suicide attackers to civil war insurgents, we show that suicide attacks are chosen when targets are "hard," i.e., difficult to destroy. Data from Israel/Palestine confirm that prediction. To explain why radical religious clubs specialize in suicide attacks we model the choice of tactics by rebels attacking hard targets, considering the human costs and tactical benefits of suicide attacks. We ask what a suicide attacker would have to believe to be rational. We then embed that attacker and other operatives in a club model. The model has testable implications for tactic choice and damage achieved by clubs and other rebels, which are supported by data on terrorist attacks in the Middle East: Radical religious clubs are more lethal and choose suicide terrorism more often, when they provide benign local public goods. Our results suggest benign tactics to counter terrorism by religious radicals. |
| JEL: | D2 D31 H41 H56 H68 J0 J13 O17 O24 Z12 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13725&r=pol |