nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒07‒28
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Effects of Electoral Institutions in Rwanda: Why Proportional Representation Supports the Authoritarian Regime By Alexander Stroh
  2. State-Owned Enterprises, Political Ideology, and Redistribution By Veysel Avsar; Cem Karayalcin; Mehmet Ali Ulubasoglu
  3. Federalism and Accountability with Distorted Election Choices By Sebastian G. Kessing
  4. Local public education and childless voting: the arising of an "ends with the middle" coalition By Berardino Cesi
  5. Model of the 2000 Presidential Election: Instrumenting for Ideology By Fernandez, Jose; Cataiefe, Guido
  6. Democracy and Economic Development By Chittawan Chanagul
  7. Kingmakers and Leaders in Coalition Formation By Marc Kilgour; Steven J. Brams
  8. Does Social Capital Create Trust? Evidence from a Community of Entrepreneurs By Fabio Sabatini
  9. Are Happier People Better Citizens? By Cahit Guven
  10. The political economy of Land Reform: A new perspective applied to Latin America By Miguel Rocha de Sousa
  11. Voting with their feet?: local economic conditions and migration patterns in New England By Alicia Sasser

  1. By: Alexander Stroh (GIGA Institute of African Studies)
    Abstract: While much has been written about the special design of Rwanda’s judiciary in order to handle the aftermath of the genocide in 1994, other institutional actions resulting from the 2003 constitution have rarely been addressed in research. However, the second (partial) par-liamentary elections in September 2008 revealed some of the implications which the care-fully designed electoral system has for Rwanda’s political development. As a starting point, the paper emphasises the need to link the debates on institutional design in divided societies with elections in authoritarian regimes. Under different regime types, “institutional engi-neers” may pursue different goals. The paper concludes that in the case of Rwanda propor-tional representation (PR) has been implemented to support undemocratic goals. PR limits the local accountability of politicians in a political environment in which the government is not controlled by a democratic opposition. Thus, Rwanda’s current PR system facilitates the maintenance of authoritarian power in the country, whereas small constituencies would es-tablish closer links between the local populations and their representatives.
    Keywords: Rwanda, electoral authoritarianism, electoral system, parliament, constituency size
    Date: 2009–07
  2. By: Veysel Avsar; Cem Karayalcin; Mehmet Ali Ulubasoglu
    Abstract: Many economies have undergone the process of privatizing their state-owned enterprises. Recently, however, this process has slowed down in some economies and has been completely stalled in others. Here we formalize the view that this is so because these enterprises are major instruments of income redistribution and, in economies with significant degrees of income inequality, segments of the population that benefit from this redistribution would use their political power to oppose its abandonment. We find strong empirical support for this hypothesis using cross-country data on the relative size of the state-owned-enterprise sector. We also find robust evidence that left-wing (vis-à-vis right-wing) governments are associated with greater redistribution in more unequal societies. Further, this effect is non-linear, implying that redistribution becomes more costly at higher levels of inequality. We also find the same result for authoritarian (vis-à-vis democratic) governments.
    Date: 2009–06–22
  3. By: Sebastian G. Kessing
    Abstract: This study analyzes the interaction between distorted election choices and the architecture of government with a focus on the implications for the accountability of politicians. Contrasting centralized with decentralized political systems, it is shown that centralization is likely to result in higher accountability if election choices are subject to small random distortions. Furthermore, equity and efficiency arguments for uniform policies in centralized systems are derived as these are likely to result in the better overall performance of politicians and in more equal performance across regions.
    Keywords: accountability, federalism, decentralization, retrospective voting
    Date: 2009
  4. By: Berardino Cesi (Université de Cergy-Pontoise, THEMA. Site des Chênes I, 33 Bd du Port, F-95000, Cergy- Pontoise, France)
    Abstract: We show that capitalization of local education into the housing price induces childless voters to support local education. In particular, low income childless households vote for a tax raise when capitalization is strong, whereas high income childless supports a higher tax when capitalization is weak. The median income voter is never pivotal because "ends with the middle" coalitions arise: high income households (with and without a child) makes coalition with middle income class with a child, whereas low income households (with and without a child) make coalition with childless middle income class. We ?nd that the income of the childless median voter is higher than the median income, whereas median voter with a child has income lower than the median. Thus the equilibrium tax preferred by the median voter (childless or not), is higher than the tax preferred by the childless median income voter and lower than the tax preferred by the median income voter with a child. This result implies that it is not possible to exclude voting equilibria in which the tax of the childless median voter is higher than the tax of the median voter with a child.
    Keywords: local public education; housings; local tax; capitalization; childless voting
    JEL: H52 H72 I22 R2
    Date: 2009
  5. By: Fernandez, Jose; Cataiefe, Guido
    Abstract: In a spatial model of voting, a voter's utility for a candidate is a function of ideological distance from the candidate and a candidate's quality. Candidate quality can potentially bias the measure of ideological distance in two ways. First, voters may be more drawn to high quality candidates thereby reducing the ideological distance. Second, a candidate's ideological position is a function of rivalsqualities and his own quality. We derive a theoretical model to sign the direction of both biases analytically. Next, using techniques established in the industrial organization literature, we estimate the model using two sets of instrumental variables.
    Keywords: spatial voting; discrete choice; instrumental variables
    JEL: C35 D72
    Date: 2009–04–21
  6. By: Chittawan Chanagul
    Abstract: With the goal of freeing the world from poverty, some Western authorities have consistently insisted on promoting democracy in totalitarian states in the past decades. Seeing that democratic political system are stably established more and more in many countries, an opportunity arises to determine the effects of democracy on economic development. Taking advantage of this fact, this paper attempts to explore whether or not democracy contributes largely to prosperity of a nation. The conclusion is that, whereas democracy acts as a catalyst that influences prosperity in many already well-to-do nations, democracy per se is not significantly beneficial to low initial income countries. Another interesting point found in this study is that the Western colonialism tends to be one of the most significant factors in explaining poor economic development in many regions of the world today.
    JEL: O1 O43 O57
    Date: 2009–11
  7. By: Marc Kilgour (Wilfrid Laurier University); Steven J. Brams (New York University)
    Abstract: Assume that players strictly rank each other as coalition partners. We propose a procedure whereby they “fall back” on their preferences, yielding internally compatible, or coherent, majority coalition(s), which we call fallback coalitions. If there is more than one fallback coalition, the players common to them, or kingmakers, determine which fallback coalition will form. The players(s) who are the first to be acceptable to all other members of a fallback coalition are the leader(s) of that coalition. The effects of different preference assumptions—particularly, different kinds of single-peakedness—and of player weights on the number of coherent coalitions, their connectedness, and which players become kingmakers and leaders are investigated. The fallback procedure may be used (i) empirically to identify kingmakers and leaders or (ii) normatively to select them.
    Keywords: Coalition, Fallback Process, Kingmaker Leader, Cardinally Single-peaked, Ordinally Single-peaked
    JEL: C71 C78 D72
    Date: 2009–05
  8. By: Fabio Sabatini (University of Siena)
    Abstract: Which kind of social capital fosters the diffusion of development-oriented trust? This paper carries out an empirical investigation into the causal relationships connecting four types of social capital (i.e. bonding, bridging, linking, and corporate), and different forms of trust (knowledge-based trust, social trust, trust towards public services and political institutions), in a community of entrepreneurs located in the Italian industrial district of the Tuscia. Our results suggest that the main factors fostering the diffusion of social trust among entrepreneurs are the perception that the local community is a safe place, and the establishment of corporate ties through professional associations. Trust in people is positively and significantly correlated also to higher levels of satisfaction and confidence in public services. Participation in voluntary organizations does not appear to increase trust in people. Rather, we find evidence of the other way round: interpersonal trust seems to encourage civic engagement.
    Keywords: Trust, Social capital, Safety, Professional associations, Entrepreneurship, Corporate ties, Group and Interpersonal Processes, Social Perception and Cognition
    JEL: J24 O15 Z13
    Date: 2009–06
  9. By: Cahit Guven
    Abstract: This paper presents evidence on causal influence of happiness on social capital and trust using German Socio-Economic Panel. Exploiting the unexplained cross-sectional variation in individual happiness (residuals) in 1984 to eliminate the endogeneity problem, the paper nds that happier people trust others more, and importantly, help create more social capital. Specifically, they have a higher desire to vote, perform more volunteer work, and more frequently participate in public activities. They also have a higher respect for law and order, hold more association memberships, are more attached to their neighborhood, and extend more help to others. Residual happiness appears to be an indicator of optimism, and has an inverse U-shaped relationship with social capital measures. The findings also suggest that the relationship between happiness and social capital strengthened in the world in the last decade.
    Keywords: happiness, trust, social capital, optimism.
    JEL: Z13
    Date: 2009–04–14
  10. By: Miguel Rocha de Sousa (Department of Economics, University of Évora; NICPRI-UE)
    Abstract: We define in section 1 our notion of land reform, on section 2, the most important social and political movements of land reform in Latin America are presented. On section 3 we use a theoretical model in the context of economic growth with human capital learning-by-doing to evaluate land reforms. Section 4, discusses the results. Section 5 presents some economic efficiency estimates for the “Cédula” project of 2000 in NE Brazil - a market led land bill project, sponsored by the World Bank (WB) and the Ministry of Agricultural Development (MDA). Finally, section 6 concludes, and section 7 presents the references.
    Keywords: Brazil, “Cédula”, human capital, Land Reform, Latin America, Learning by doing, “MST - Movimento dos Sem Terra”.
    JEL: Q15
    Date: 2009
  11. By: Alicia Sasser
    Abstract: Over the past several years, policymakers and business leaders throughout New England have expressed concern regarding the region's ability to attract and retain skilled workers, given the economic climate of the region compared with other parts of the nation. Indeed, net domestic migration for New England became increasingly negative after the 2001 recession, as the number of people leaving the region exceeded those entering. Examining the factors underlying these migration trends is important for determining what role, if any, public policy might play in addressing their potential impact on the region's labor supply. Using a logistic migration model, this paper examines the relative role of economic factors - namely labor market conditions, per capita incomes, and housing affordability - in determining domestic state-to-state migration flows. Using such flows from the Internal Revenue Service for each of the 48 states in the continental United States from 1977 through 2006, the model controls for demographic characteristics of origin states as well as state-specific fixed amenities, such as climate, culture, and natural features. The model's estimates show that while all three measures of relative economic conditions are significant determinants of migration, the magnitude of their impact varies. The estimates also show that the impact of these economic factors on state-to-state migration flows has changed considerably over time. For example, the importance of per capita income as a determining factor has fallen considerably since the late 1970s, while that of housing affordability has risen. Forecasts of net domestic migration based on the model show that while New England will continue to lose individuals to other states during 2009, the pace of out-migration will likely slow, particularly in Massachusetts. This is likely due to the fact that both the region and the Bay State are performing slightly better than the nation as a whole during the current recession. However, this trend may reverse itself if economic conditions deteriorate in the New England states relative to other parts of the country.
    Keywords: Labor supply - New England ; Migration, Internal - United States
    Date: 2009

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