nep-pol New Economics Papers
on Positive Political Economics
Issue of 2010‒06‒26
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Public Employment and Political Pressure: The Case of French Hospitals By Clark, Andrew E.; Milcent, Carine
  2. Education and the Political Economy of Environmental Protection By Natacha Raffin
  3. The Timing of Elections in Federations : A Disciplining Device against Soft Budget Constraints ? By Karolina Kaiser; Emmanuelle Taugourdeau
  5. Exporting, Productivity and Government Interventions: Is There a Link? By Elena Besedina
  6. Left, Right and Beyond: the Pragmatics of Political Mapping By Jonathan White
  7. The Political Economy of the Subprime Mortgage Credit Expansion By Atif Mian; Amir Sufi; Francesco Trebbi
  8. The Political Economy of Fiscal Reform: The Case of Colombia, 1986-2006 By Mauricio Olivera; Monica Pachon; Guillermo Perry
  10. Brain Drain and Institutions of Governance: Educational Attainment of Immigrants to the US 1988-1998 By Aniruddha Mitra; James T. Bang
  11. Income Inequality, the Median Voter, and the Support for Public Education By Sean Corcoran; William N. Evans
  12. Institutional communication revisited: Preferences, opportunity structures and scientific expertise in policy networks By Philip Leifeld; Volker Schneider
  13. Gender bias and the female brain drain By Aniruddha Mitra; James T. Bang
  15. Colonialism, Elite Formation and Corruption By Luis Angeles; Kyriakos C. Neanidis

  1. By: Clark, Andrew E. (Paris School of Economics); Milcent, Carine (Paris School of Economics)
    Abstract: This paper uses an unusual administrative dataset covering the universe of French hospitals to consider hospital employment: this is consistently higher in public hospitals than in Not-For-Profit (NFP) or private hospitals, even controlling for a number of measures of hospital output. NFP hospitals serve as a benchmark, being very similar to Public hospitals, but without political influence on their hiring. Public-hospital employment is positively correlated with the local unemployment rate, whereas no such relationship is found in other hospitals. This is consistent with public hospitals providing employment in depressed areas. We appeal to the Political Science literature and calculate local political allegiance, using expert evaluations on various parties’ political positions and local election results. The relationship between public-hospital employment and local unemployment is stronger the more left-wing the local municipality. This latter result holds especially when electoral races are tight, consistent with a concern for re-election.
    Keywords: hospitals, public employment, unemployment, political preferences
    JEL: D21 D72 I18 J21
    Date: 2010–06
  2. By: Natacha Raffin (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: We develop a political economy model that might explain the different environmental performance of countries, through educational choices. Individuals decide whether to invest in additional education according to their expectations regarding future environmental quality. They also vote on a tax that will be exclusively used to finance environmental protection. We show that the model may generate multiple equilibria and agents' expectations may be self-fulfilling when the public policy is endogenous. Then, we analyse the long-term implications of a public policy that would favour education and make it possible to select the higher equilibrium.
    Keywords: Environmental quality, human capital, education, self-fulfilling prophecies, public policy.
    Date: 2010–05
  3. By: Karolina Kaiser (Université de Munich - Ludwigstr. 33/II); Emmanuelle Taugourdeau (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: We introduce political economics into the soft budget constraint problem by asking if the timing of elections has the potential to harden budget constraints. Specifically, we ask under which circumstances the soft budget constraint problem is worse - with synchronized elections, i.e. simultaneous central and regional office terms, or with staggered elections, i.e. terms of office that do not coincide. We find that staggered elections clearly improve fiscal discipline at the local level as well as welfare.
    Keywords: Soft budget constraints, fiscal federalism, elections.
    Date: 2010–02
  4. By: Ali T. Akarca (Department of Economics, University of Illinois at Chicago); Cem Baslevent (Department of Economics, Bilgi University)
    Abstract: Using data drawn from a nationwide voter-tendencies survey conducted shortly before the July 2007 parliamentary election in Turkey, inter-party vote movements during the 2002-2007 period are investigated with the Justice and Development Party (AKP) as the focal point. A descriptive analysis relying on two and four-way partitions of the dataset reveals that, in comparison to the relatively small group of ‘deserters’ from the party, the ‘newcomers’ to the AKP are younger, mostly female, more satisfied with the performance of the economy, and more likely to be pro-EU membership. The data also shows that AKP supporters are less educated and less concerned with the threats to secularism than the rest of the voters. The key finding of the econometric work is that economic evaluations—especially retrospective ones— have a strong association with the party choice in the 2007 elections.
    Date: 2010–03
  5. By: Elena Besedina (Kyiv School of Economics, Kyiv Economic Institute)
    Abstract: Recent theoretical models postulate that only the most productive firms become exporters due to the existence of costs of exporting. Empirical evidence does suggest that exporters are on average more productive than their domestic counterparts. However, contrary to the theory the productivity distribution for exporters and non-exporters overlaps. Motivated by this empirical finding, I extend an existing model of heterogeneous firms by adding endogenous trade policy based on a political economy argument. Using Ukrainian data I identify firms that receive explicit government support in the form of preferential tax policy, subsidies and other exclusive benefits. I find that explicit political support is positively associated with firms’ size, voter turnout and state ownership but not efficiency.
    Keywords: TFP, Exporting, Subsidy, Electoral Competition
    JEL: D24 D72 P26
    Date: 2010–06
  6. By: Jonathan White
    Abstract: This paper examines the political categories of ‘Left’ and ‘Right’, in particular as they are evoked and instrumentalised by political actors in the democratic process. Drawing on some of the insights of positioning theory, it shows how ‘Left’ and ‘Right’ are discursive resources deployed, contested and resisted in political exchange. The paper looks in depth at some of the political uses to which Left-Right talk may be put, discussing in particular acts of partisan profiling, of legitimisation and subversion, and the evocation or rejection of political continuity. The paper argues that while these usages can be seen as strategic moves pursued for political advantage, they have a larger significance insofar as they indicate one of the ways the democratically important imagery of Left and Right may remain active in European politics.
    Date: 2010–06
  7. By: Atif Mian; Amir Sufi; Francesco Trebbi
    Abstract: We examine how special interests, measured by campaign contributions from the mortgage industry, and constituent interests, measured by the share of subprime borrowers in a congressional district, may have influenced U.S. government policy toward the housing sector during the subprime mortgage credit expansion from 2002 to 2007. Beginning in 2002, mortgage industry campaign contributions increasingly targeted U.S. representatives from districts with a large fraction of subprime borrowers. During the expansion years, mortgage industry campaign contributions and the share of subprime borrowers in a congressional district increasingly predicted congressional voting behavior on housing related legislation. The evidence suggests that both subprime mortgage lenders and subprime mortgage borrowers influenced government policy toward housing finance during the subprime mortgage credit expansion.
    JEL: D72 G21 L51
    Date: 2010–06
  8. By: Mauricio Olivera; Monica Pachon; Guillermo Perry
    Abstract: This paper explores the characteristics of the political economy process that conditioned the scope and success of the combination of fiscal reforms before and after Colombia’s 1991 constitutional reforms. Using formal analysis of reforms and interviews with actors, reforms in taxation, decentralization, the budgetary process and pensions are examined in times of political crisis, economic crisis, and economic boom. The results generally confirm the hypothesis that increased political fragmentation and limited unilateral executive power after the 1991 reforms restricted the extent of reforms, particularly in tax law. Nonetheless, the enactment of piecemeal reforms was encouraged by crisis conditions.
    Keywords: Policymaking process, Political economy, Structural reform, Colombia
    JEL: H20 H71 H77
    Date: 2010–05
  9. By: James A. Robinson (Harvard University, Department of Government and IQSS)
    Abstract: The extent of inequality in society is determined by the distribution of assets, the rates of returns on different assets, and government policy. All of these things are deeply political and reflect the balance of political power in society and the institutions to which this balance gives rise. I illustrate this perspective on the determination of inequality by a case study of the Sudan and argue that in the Middle East and North African countries it suggests a paradox - inequality is much lower than one might anticipate. I make some conjectures about why this might be based on a comparison with the historical development of inequality in Latin America.
    Date: 2009–06
  10. By: Aniruddha Mitra; James T. Bang
    Abstract: We investigate the impact of home country institutions on the skill level of immigrants to the United States over 1988-1998. Specifically, we explore the hypothesis that institutions are multidimensional and that the different dimensions have conflicting impacts on the migration of skilled labor. Using an exploratory factor analysis on fifteen institutional variables, we identify the following dimensions of institutional character: credibility; transparency; democracy; and the security of civil society. We find that credibility and transparency increase the magnitude of brain drain; security reduces it; and democracy has no significant impact.
    Keywords: immigration, institutions, political instability, brain drain
    JEL: F22 J24 J61 J64
    Date: 2010
  11. By: Sean Corcoran; William N. Evans
    Abstract: Using a panel of U.S. school districts spanning 1970 – 2000, we examine the relationship between income inequality and fiscal support for public education. In contrast with recent theoretical and empirical work suggesting a negative relationship between inequality and public spending, we find results consistent with a median voter model, in which inequality that reduces the median voter’s tax share induces higher local spending on public education. We estimate that 12 to 22 percent of the increase in local school spending over this period is attributable to rising inequality.
    JEL: H72 I21 I22
    Date: 2010–06
  12. By: Philip Leifeld (Max Planck Institute for Research on Collective Goods, Bonn); Volker Schneider (University of Konstanz)
    Abstract: Information exchange in policy networks is usually attributed to preference similarity, influence reputation, social trust and institutional actor roles. We suggest that political opportunity structures and transaction costs play another crucial role and estimate a rich statistical network model on tie formation in the German toxic chemicals policy domain. The results indicate that the effect of preference similarity is absorbed by other determinants while opportunity structures indeed have to be taken into account. We also find that different types of information exchange operate in complementary, but not necessarily congruent, ways.
    Date: 2010–04
  13. By: Aniruddha Mitra; James T. Bang
    Abstract: This paper contributes to the emerging literature on gender differences in the causes and consequences of brain drain. Differentiating between gender bias in the access to economic opportunities and gender differentials in economic outcomes, we find that differences in access have a significant impact on the emigration of highly-skilled women relative to that of men. However, differentials in outcomes do not have a significant impact. Additionally, the structure of political institutions in the source countries does not have a significant impact on the difference in emigration rates.
    Keywords: immigration, gender, brain drain
    JEL: F22 O15
    Date: 2010
  14. By: Galal Amin (The American University in Cairo)
    Abstract: Although income distribution is one of the oldest parts of economic theory, we are still far from having any satisfactory theory explaining why income distribution in one country is more or less equal than in another, or what makes distribution move towards or away from equality over time. Behind the development of equality and inequality lie a variety of forces that do not guarantee that this development necessarily continues in the same direction, towards either a greater or smaller degree of equality. At the heart of this combination of forces that shape income distribution lies the key factor of the nature and rate of technological progress. But technology is not the only factor. There is also the nature of power structure, the rate of population growth and the degree of integration with the outside world. This paper attempts to show the likely impact of each of these factors on the trend and changes in the degree of equality and inequality. A final section applies this analysis to the development of the pattern of income distribution in Egypt over the last 200 years, followed by a few observations comparing Egypt in this respect with other Arab countries.
    Date: 2009–08
  15. By: Luis Angeles; Kyriakos C. Neanidis
    Abstract: This paper argues that corruption in developing countries has deep historical roots; going all the way back to the characteristics of their colonial experience. The degree of European settlement during colonial times is used to di¤erentiate between types of colonial experience, and is found to be a powerful explanatory factor of present-day corruption levels. The relationship is non-linear, as higher levels of European settlement resulted in more powerful elites (and more corruption) only as long as Europeans remained a minority group in the total population.
    Date: 2010

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