nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒01‒03
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Right Look: Conservative Politicians Look Better and Their Voters Reward It By Berggren, Niclas; Jordahl, Henrik; Poutvaara, Panu
  2. Do voters vote in line with their policy preferences? The role of information By Nordin, Mattias
  3. Strategic Spending in Voting Competitions with Social Networks By Carlos Lever Guzmán
  4. Cronyism By Pedro S. Martins
  5. “The scale we use, the world we see”: A contextual analyses of ethnocentric attitudes and extreme right voting in Belgium By Quentin David; Jean-Benoit Pilet; Gilles Van Hamme
  6. Industry Level Evidence On Partisan Trade Policy: Tariff vs. Antidumping By Veysel Avsar
  7. Democracy and Trade Policy: the Role of Interest Groups By Kyounghee Lee
  8. Endogenous growth in a model with heterogeneous agents and voting on public goods By Borissov, Kirill; Surkov, Alexander
  9. Immigration, integration and terrorism: is there a clash of cultures? By Fischer, Justina AV
  10. One Share-One Vote: New Empirical Evidence By Eklund, Johan E.; Poulsen, Thomas
  11. Bargaining in Legislatures: A New Donation Paradox By Maria Montero
  12. The Great Leap Forward: The Political Economy of Education in Brazil, 1889-1930 By André Martínez; Martina Viarengo; Aldo Musacchio
  13. Economic Preferences and Attitudes of the Unemployed: Are Natives and Second Generation Migrants Alike? By Constant, Amelie F.; Krause, Annabelle; Rinne, Ulf; Zimmermann, Klaus F.
  14. Corruption and Development, Revisited By Jenny D. Balboa; Shinji Takenaka

  1. By: Berggren, Niclas (The Ratio Institute); Jordahl, Henrik (Research Institute of Industrial Economics (IFN)); Poutvaara, Panu (University of Munich)
    Abstract: Previous research has established that good-looking political candidates win more votes. We extend this line of research by examining differences between parties on the left and on the right of the political spectrum. Our study combines data on personal votes in real elections with a web survey in which 2,513 non-Finnish respondents evaluated the facial appearance of 1,357 Finnish political candidates. We find that political candidates on the right are better looking in both municipal and parliamentary elections and also have a larger beauty premium in municipal, but not in parliamentary, elections. We discuss possible explanations for these patterns, based on the fact that municipal candidates are relatively unknown.
    Keywords: Beauty; Elections; Political candidates; Appearance; Ideology; Parties
    JEL: D72 J45 J70
    Date: 2010–12–20
  2. By: Nordin, Mattias (Uppsala Center for Fiscal Studies)
    Abstract: This paper investigates how information aects voting behavior. Speci cally, I test (i) if more informed voters are better at voting for their most preferred politicians and (ii) if this translates into a bias on the aggregate level. To do so, I use a set of Swedish individual survey data on the preferences for public spending of both politicians and voters, which provides an opportunity to investigate how information affects voters' ability to match their preferences with those of the politicians. The results support both hypotheses: more informed voters are more likely to vote for their most preferred politicians, and on the aggregate level, I find that the left-wing parties would have received 1 to 3 percentage points fewer votes if all voters had been fully informed.
    Keywords: Voting behavior; Information; Vote aggregation
    JEL: D70 D80 H71
    Date: 2010–12–21
  3. By: Carlos Lever Guzmán
    Abstract: This paper proposes a model of voting competitions (political campaigns and strategic lobbying) where voters are influenced by the opinion of their neighbors on a social network. In the unique pure strategy nash equilibrium, resources are targeted toward individuals with an influential position in the network. This finding contrasts with previous theories of strategic spending which predict that parties (or lobbies) should spend more on individuals who have a higher probability of being pivotal for the vote. The paper then tests the model using data on campaign contributions by interests groups in the US. House of Representatives. The estimations show that both network influence and pivotality are significant predictors of campaign contributions.
    Keywords: Network games, strategic spending, Colonel Blotto games, counteractive lobbying, Bonacich centrality
    JEL: D85 D72
    Date: 2010–12
  4. By: Pedro S. Martins
    Abstract: Politicians can use the public sector to give jobs to cronies, at the expense of the efficiency of those organisations and general welfare. Motivated by a simple model of cronyism that predicts spikes in appointments to state-owned firms near elections, we regress 1980-2008 monthly hirings across all state-owned Portuguese firms on the country's political cycle. In most specifications, we also consider private-sector firms as a control group. Consistent with the model, we find that public-sector appointments increase significantly over the months just before a new government takes office. Hirings also increase considerably just after elections but only if the new government is of a different political colour than its predecessor. These results also hold when conducting the analysis separately at different industries and most job levels, including less skilled positions. We find our evidence to be consistent with cronyism and politically-induced misallocation of public resources.
    Keywords: Corruption, matched employer-employee panel data, public-sector employment
    JEL: J45 H11 J23
    Date: 2010–12
  5. By: Quentin David (CREA, Université du Luxembourg); Jean-Benoit Pilet (CEVIPOL, Université Libre de Bruxelles); Gilles Van Hamme (IGEAT, Université Libre de Bruxelles)
    Abstract: Contextual analyses have received increasing interest as a way to understand electoral behaviors during the last decade. However, the growing interest in contextual analysis among political scientists is now limited by conceptual and methodological difficulties related to scale. Indeed, we show here that the scale we use might significantly change the results we get. Our central claim is therefore to plead in favor of a more careful reflection on scale in contextual analysis. This reflection on the impact of scale is made by applying two different methods to explain extreme right voting and ethnocentric attitudes. In the first, we define the context in which individuals are embedded through circles around their home while in the second, we try to capture the real environment of individuals by defining their proximity area, living pool, and employment pool. When applying contextual variables (share of migrants and economic context) to explain extreme right voting and ethnocentric attitudes, the intermediate scale – defined here as the municipality or radius of 4 to 8 km around one’s residence – appears to be the most influential in both approaches compared either to closer neighborhood or larger levels. Our analysis also shows an interesting differential for the effect of contextual variables on ethnocentric attitudes and on extreme right voting, especially concerning the impact of urban versus rural context.
    Keywords: Elections, Belgium, Voters
    JEL: D72
    Date: 2010
  6. By: Veysel Avsar (Department of Economics, Florida International University)
    Abstract: This paper empirically examines the influence of political partisanship on antidumping protection, which has become the most frequently used ontingent trade remedy in the last 20 years. Supporting earlier studies of ideology-based trade policy, we first show that the prediction of the partisan model also holds at the industry level. Employing recently available data on industry protection and production, our results confirm that the tariff level for an industry is increasing in the labor intensity of that industry when there is a left-wing (pro-labor) government in power. In addition, following the substitution argument of tariff and antidumping initiations, we show that an increase in the leftist orientation of the government makes labor intensive industries, which already grant higher protection via tariff, less likely to file an antidumping petition. The evidence on the governments¡¯ decision to impose antidumping duty also demonstrates that the increase in the leftist orientation of the governments is associated with an increase in the likelihood of an affirmative antidumping outcome for the petitions of labor intensive industries. Although antidumping is an administrative protection which includes a set of necessary procedures and rules to follow, our findings clearly points out the political bias in AD actions in the form of partisan preferences.
    Keywords: Antidumping, Political Ideology, Trade Liberalization
    JEL: F13 F14
    Date: 2010–12
  7. By: Kyounghee Lee (Korea Institute for International Economic Policy)
    Abstract: As democracy develops and matures, the number of interest groups attempting to voice their interests with respect to trade policies tends to increase, and sometimes governments collide with them in the process of enacting restraints. This paper aims to investigate empirically the role of interest groups in Korea's trade policy, utilizing the Grossman and Helpman (1994). Contrary to prevailing wisdom, the results of our empirical investigation suggest that a greater level of participation by diverse interest groups actually promotes trade liberalization, as different groups offset each other's demands in the act of obtaining government protection. The findings imply that "openness and pluralism" with respect to interest groups is necessary if better strategies for trade liberalization are to be developed.
    Keywords: trade policy, interest groups, democracy, political economy, Korea
    JEL: F13 F59
    Date: 2010
  8. By: Borissov, Kirill; Surkov, Alexander
    Abstract: We consider a Barro-type endogenous growth model in which the government’s purchases of goods and services enter into the production function. The provision of government services is financed by flat-rate (linear) income or lump-sum taxes. It is assumed that individuals differing in their discount factors vote on the tax rates. We propose a concept of voting equilibrium leading to some versions of the median voter theorem for steady-state equilibria, fully characterize steady-state equilibria and show that if the median voter discount factor is sufficiently low, the long-run rate of growth in the case of flat-rate income taxation is higher than that in the case of lump-sum taxation.
    Keywords: economic growth; voting; proportional; flat-rate; linear tax; lump-sum tax; heterogeneous agents; endogenous growth
    JEL: E62 H21 H31 H41 D91 D72 O4
    Date: 2010
  9. By: Fischer, Justina AV
    Abstract: We test whether immigrants are more prone to support terror than natives because of lower opportunity costs, using the international World Values Survey data. We show that, in general, economically, politically and socially non-integrated persons are more likely to accept using violence for achieving political goals, consistent with the economic model of crime. We also find evidence for the destructive effects of a ‘clash of cultures’: Immigrants in OECD countries who originate from more culturally distanced countries in Africa and Asia appear more likely to view using violence for political goals as justified. Most importantly, we find no evidence that the clash-of-cultures effect is driven by Islam religion, which appears irrelevant to terror support. As robustness test we relate individual attitude to real-life behavior: using country panels of transnational terrorist attacks in OECD countries, we show that the population attitudes towards violence and terror determine the occurrence of terror incidents, as does the share of immigrants in the population. A further analysis shows a positive association of immigrants from Africa and Asia with transnational terror, while the majority religion Islam of the sending country does not appear to play a role. Again, we find that culture defined by geographic proximity dominates culture defined by religion.
    Keywords: terror; terrorism; violence; conflict; immigration; culture; integration; crime
    JEL: Z1 D74 O15 H56 K42
    Date: 2010–12–26
  10. By: Eklund, Johan E. (The Ratio Institute and Jönköping International Business School); Poulsen, Thomas (Copenhagen Business School)
    Abstract: Shares with more voting rights than cash flow rights provide their owners with a disproportional influence that is often found to destroy the value of outside equity. This is taken as evidence of discretionary use of power. However, concentration of power does not necessarily result from control enhancing mechanisms; it could also be that some shareholders retain a large block in a one share-one vote structure. In this paper, we develop a methodology to disentangle disproportionality, which allows us to test the effect of deviations from one share-one vote more precisely. Our empirical findings add to the existing literature.
    Keywords: Ownership structure; one share-one vote; proportionality; performance; entrenchment
    JEL: G32 G34
    Date: 2010–12–17
  11. By: Maria Montero (School of Economics, University of Nottingham)
    Abstract: It is well known that proposers have an advantage in the canonical model of bargaining in legislatures: proposers are sure of being part of the coalition that forms, and, conditional on being in a coalition, a player receives more as a proposer than as a coalition partner. In this paper I show that, if parties di¤er in voting weight, it is possible for a party to donate part of its proposing probability to another party and be better-o¤ as a result. This can happen even if the recipient never includes the donor in its proposals. Even though actually being the proposer is valuable, having a higher probability of being proposer may be harmful.
    Keywords: legislative bargaining, weighted majority games, voting paradoxes
    JEL: C78 D72
    Date: 2010–11
  12. By: André Martínez; Martina Viarengo; Aldo Musacchio
    Abstract: Recent research links the inequality across countries and regions to colonial institutions. This paper argues that trade shocks could alter the development path of a country or subnational units, in spite of its colonial institutions. This hypothesis is analyzed using state-level data for Brazil, a country with high regional heterogeneity in endowments. We find that positive trade shocks, or improvements in export tax revenues, increased expenditures on education per capita and education outcomes in the period 1889 to 1930. In fact, trade shocks ended up altering the inequality in education levels across states in a permanent way. The paper ends by explaining why politicians spent windfall tax revenues to invest on education.
    Keywords: Institutions, Fiscal Federalism, Education, Long Run Development
    JEL: I20 H41 H75 N26 N36 N46 N96
    Date: 2010–12
  13. By: Constant, Amelie F. (DIW DC, George Washington University); Krause, Annabelle (IZA); Rinne, Ulf (IZA); Zimmermann, Klaus F. (IZA, DIW Berlin and Bonn University)
    Abstract: In this paper we study the economic effects of risk attitudes, time preferences, trust and reciprocity while we compare natives and second generation migrants. We analyze an inflow sample into unemployment in Germany, and find differences between the two groups mainly in terms of risk attitudes and positive reciprocity. Second generation migrants have a significantly higher willingness to take risks and they are less likely to have a low amount of positive reciprocity when compared to natives. We also find that these differences matter in terms of economic outcomes, and more specifically in terms of the employment probability about two months after unemployment entry. We observe a significantly lower employment probability for individuals with a high willingness to take risks. Some evidence suggests that this result is channeled through reservation wages and search intensity.
    Keywords: unemployment, migration, personality traits, risk attitudes, time preferences, trust, reciprocity
    JEL: F22 J15 J61 J64
    Date: 2010–12
  14. By: Jenny D. Balboa; Shinji Takenaka (Philippine Institute for Development Studies)
    Abstract: Graft and corruption is considered to be one of the biggest threat to development. Several studies had shown the tremendous impact of corruption in the economy. For a number of developing countries, a huge portion of government resources are lost and wasted due to corrupt activities, further plunging the country to poverty and underdevelopment. Various efforts to combat this social ill have been explored. However, the problem continues to persist. This short paper revisits the issue and aims to contribute to the growing literature of understanding corruption in developing economies and creating the necessary policy response. It answers the following questions: What are the different forms of corruption? What drives corruption? What has been done to address the issue? The Philippine case is also briefly discussed.
    Keywords: political economy, corruption, development
    JEL: F5
    Date: 2010

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