nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒11‒21
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Inter-regional redistribution through infrastructure investment: tactical or programmatic? By Albert Solé-Ollé
  2. Does the Risk or Realization of a Federal Election Precipitate Canadian Output Growth? By J. Stephen Ferris; Marcel-Cristian Voia
  3. Testing Models of Distributive Politics using Exit Polls to Measure Voters Preferences and Partisanship By Valentino Larcinese; James M. Snyder; Cecilia Testa
  4. Romes without Empires: Urban Concentration, Political Competition, and Economic Growth By Cem Karayalcin; Mehmet Ali Ulubasoglu
  5. Political Sociology of Poverty In India: Between Politics of Poverty and Poverty of Politics By Anand Kumar
  6. Accountability and Cheap Talk By Di Maggio, Marco
  7. Individual Attitudes towards Skilled Migration: an Empirical Analysis across Countries By Giovanni Facchini; Anna Maria Mayda
  8. Regional income inequality and happiness: Evidence from Japan By Oshio, Takashi; Kobayashi, Miki

  1. By: Albert Solé-Ollé (Universitat de Barcelona & Institut d’Economia de Barcelona (IEB))
    Abstract: In this paper we analyze the effects of both tactical and programmatic politics on the inter-regional allocation of infrastructure investment. We use a panel of data for the Spanish electoral districts during the period 1964-2004 to estimate an equation where investment depends both on economic and political variables. The results show that tactical politics do matter since, after controlling for economic traits, the districts with more ‘Political power’ still receive more investment. These districts are those where the incumbents’ Vote margin of victory/ defeat in the past election is low, where the Marginal seat price is low, where there is Partisan alignment between the executives at the central and regional layers of government, and where there are Pivotal regional parties which are influential in the formation of the central executive. However, the results also show that programmatic politics matter, since inter-regional redistribution (measured as the elasticity of investment to per capita income) is shown to increase with the arrival of the Democracy and EU Funds, with Left governments, and to decrease the higher is the correlation between a measure of ‘Political power’ and per capita income.
    Keywords: Infrastructures, Political Economy, Redistribution
    JEL: R1 O4
    Date: 2009–11
  2. By: J. Stephen Ferris (Department of Economics, Carleton University); Marcel-Cristian Voia (Department of Economics, Carleton University)
    Abstract: This paper asks whether Canadian data is consistent with political opportunism, partisanship and/or political competition effects on real output growth since Confederation. Using data from the 1870 to 2005 time period, we find support for an electoral cycle only if actual election dates are replaced with the predicted election hazard (generated by from a Cox-proportional hazard model) in the test. On the other hand, we find strong evidence for the existence of partisan cycles in the data and mixed evidence with respect to whether changes in the degree of political competition have affected real output growth. Evidence in favour of such an effect arises only in more recent times, from 1924 onwards.
    Date: 2009–11–10
  3. By: Valentino Larcinese (LSE); James M. Snyder (MIT); Cecilia Testa (University of London)
    Abstract: This paper tests various hypotheses about distributive politics by studying the distribution of federal spending across U.S. states over the period 1978-2002. We improve on previous work by using survey data to measure the share of voters in each state that are Democrats, Republicans, and independents, or liberals, conservatives and moderates. We find no evidence that the allocation of federal spending to the states is distorted by strategic manipulation to win electoral support. States with many swing voters are not advantaged compared to states with more loyal voters, nor do “battleground states” attract more federal funds. Moreover, we find that spending has little or no effect on voters’ choices, whereas partisanship and ideology have massive effects.
    Keywords: Ideological attitudes, partisanship, distributive politics, federal budget
    Date: 2009–11–17
  4. By: Cem Karayalcin; Mehmet Ali Ulubasoglu
    Abstract: Many developing economies are characterized by the dominance of a super metropolis. 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 different interest groups (localized in different specialized cities/regions) will lead to low investment and growth when the number of such groups is small. 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 in relatively few urban nodes, tax rates would be higher and growth rates lower. Our empirical work exploits the connection between urban wealth (with the political power it affords) and national soccer championships. By using a cross-country data set for 103 countries for the period 1960-99, we find strong and robust evidence that countries with higher concentrations in urban wealth-as proxied by the number of different cities with championships in national soccer leagues-tend to have lower long-run growth rates.
    Date: 2009–11–11
  5. By: Anand Kumar
    Abstract: Political sociology of poverty requires an analysis of the relationship between the political, economic and socio-cultural actors, institutions and processes in the context of poverty. It assumes that poverty is a complex and cumulative consequence of power relations over a period of time between groups within a region and between regions in the modern world system. [CPRC Working Paper 3].
    Keywords: poverty, regions, power relations, political, sociology, economic, population, rural India, socio-cultural, actors, institutions,
    Date: 2009
  6. By: Di Maggio, Marco
    Abstract: This paper analyzes a cheap talk model with heterogeneous receivers who are accountable for the correctness of their actions, showing that there exists a truth-revealing equilibrium. This sheds new light on the important role played by elections in shaping politicians' and, more surprisingly, advisor's behaviors in a cheap-talk setting. In deciding which message to send, the advisor is aware that he could use this message to affect the electoral outcome, the manipulation effect, or to shape the first period policy, the influence effect. When the first effect dominates the second there exists an informative equilibrium. In addition, I show that the presence of heterogeneous politicians leads to an increase in voters' welfare as a result of better-informed decisions. I allow the politician to delegate authority to the expert, showing that due to the signaling value of the politician's delegation decision, only corrupt or incompetent incumbents will delegate the second-period decision. Finally, I generalize the results in a number of different directions.
    Keywords: cheap talk; corruption; reputation; ideology.
    JEL: D73 D83 D82
    Date: 2009–11–15
  7. By: Giovanni Facchini (Erasmus University Rotterdam, University of Milan, CEPR, LdA and CES-Ifo); Anna Maria Mayda (Georgetown University, CEPR, IZA, CReAM and LdA)
    Abstract: It is commonly argued that skilled immigration benefits the destination country through several channels. Yet, only a small group of countries reports to have policies in place aimed at increasing the intake of skilled immigrants. Why? In this paper we analyze the factors that affect a direct measure of individual attitudes towards skilled migration, focusing on two main channels: the labor market and the welfare state. We find that more educated natives are less likely to favor skilled immigration - consistent with the labor-market channel – while richer people are more likely to do so – in accordance with the welfare state channel under the tax adjustment model. Our findings thus suggest that the labor market competition threat perceived by skilled natives in the host countries might be driving the observed cautious policies.
    Keywords: Skilled Immigration, Attitudes, Immigration Policy, Political Economy
    JEL: F22 J61
    Date: 2009–11–17
  8. By: Oshio, Takashi; Kobayashi, Miki
    Abstract: We investigated how regional income inequality is associated with the individual assessment of happiness based on micro data from nationwide surveys in Japan. Our multilevel analysis using logit and ordered logit models confirmed that individuals who live in areas of high inequality tend to report themselves as less happy, even after controlling for various individual and regional factors. Notably, the fact that happiness depends on not only income but also income inequality indicates the importance of income redistribution for individual well-being. We also find that the association between regional inequality and happiness is not uniform across the different levels of perceived happiness. Moreover, the sensitivities of happiness to regional inequality differ substantially by key individual attributes such as gender, marital status, level of education, occupational status, and political views. Among others, an important finding for social policy is that those of unstable occupational status and those with a lower level of education are more sensitive to regional inequality. Given the fact that these people tend to be less happy than the others, this result points to the risk that regional inequality additionally reduces the well-being of those under unfavorable socioeconomic conditions.
    Keywords: Happiness, income inequality, multilevel analysis, Japan
    Date: 2009–10

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