nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒04‒02
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. What Drives U.S. Immigration Policy? Evidence from Congressional Roll Call Votes By Facchini, Giovanni; Steinhardt, Max
  2. Population Aging and Individual Attitudes toward Immigration: Disentangling Age, Cohort and Time Effects By Lena Calahorrano
  3. "The People Want the Fall of the Regime": Schooling, Political Protest, and the Economy By Campante, Filipe R.; Chor, Davin
  4. Determinants of Protests: Longitudinal Evidence from Ukraine's Orange Revolution By Carlos Bozzoli; Tilman Brück
  5. A Political Economy of the Immigrant Assimilation: Internal Dynamics By Gil S. Epstein; Ira N. Gang
  6. Political Culture and Discrimination in Contests By Gil S. Epstein; Yosef Mealem; Shmuel Nitzan
  7. Do electoral rules and elections matter in expenditure fragmentation? Empirical evidence from Italian regions By Santolini, Raffaella
  8. Food Prices and Political Instability By Rabah Arezki; Markus Bruckner
  9. Procedurally Fair Provision of Public Projects An axiomatic characterization By Werner Güth; Hartmut Kliemt
  10. Politically Feasible Emission Target Formulas to Attain 460 ppm CO[subscript 2] Concentrations By Frankel, Jeffrey A.; Bosetti, Valentina
  11. Beyond Condorcet: Optimal Aggregation Rules Using Voting Records By Eyal Baharad; Jacob Goldberger; Moshe Koppel; Shmuel Nitzan

  1. By: Facchini, Giovanni; Steinhardt, Max
    Abstract: Immigration is one of the most hotly debated policy issues in the United States today. Despite marked divergence of opinions within political parties, several important immigration reforms were introduced in the post 1965 era. The purpose of this paper is to systematically analyze the drivers of congressional voting behavior on immigration policy during the period 1970-2006, and in particular, to assess the role of economic factors at the district level. Our findings provide robust evidence that representatives of more skilled labor abundant constituencies are more likely to support an open immigration policy concerning unskilled labor. Thus, a simple factor-proportions-analysis model provides useful insights regarding the policy making process on one of the most controversial facets of globalization.
    Keywords: Immigration policy; Political economy; Voting
    JEL: F22 J61
    Date: 2011–03
  2. By: Lena Calahorrano (RWTH AAchen University)
    Abstract: 49 pages
    Keywords: Immigration, Demographic Change, Political Economy
    JEL: D78 F22 J10
    Date: 2011
  3. By: Campante, Filipe R. (Harvard University); Chor, Davin (Singapore Management University)
    Abstract: We examine several hypotheses regarding the determinants and implications of political protest, motivated by the wave of popular uprisings in Arab countries starting in late 2010. While the popular narrative has emphasized the role of a youthful demography and political repression, we draw attention back to one of the most fundamental correlates of political activity identified in the literature, namely education. Using a combination of individual-level micro data and cross-country macro data, we highlight how rising levels of education coupled with economic under-performance jointly provide a strong explanation for participation in protest modes of political activity as well as incumbent turnover. Political protests are thus more likely when an increasingly educated populace does not have commensurate economic gains. We also find that the implied political instability is associated with heightened pressures towards democratization.
    JEL: D72 D78 I20 I21 O15
    Date: 2011–03
  4. By: Carlos Bozzoli; Tilman Brück
    Abstract: This paper is the first study that analyzes the drivers of political protest using longitudinal data from a critical revolution that changed -at least temporarily- the political landscape in a transition country. We make use of a rich dataset consisting of panel data collected before and after the so called "Orange" revolution in Ukraine. Our empirical approach tackles two different -and equally interesting- features of the revolution: the determinants of participation (both in the protests and counter-protests) and the "selection" of participants into different levels of involvement (i.e. intensity of participation). We consider different drivers of participation, from traditional proxies for opportunities and grievances, but we also analyze the role of political and economic preferences, risk tolerance, life satisfaction, and indicators of network connectivity. What emerges from this study is a more nuanced pattern of participation that does not link uniquely to a single theoretical model.
    Keywords: Conflict, protest, transition economy, Ukraine, longitudinal studies
    JEL: P20 D74
    Date: 2011
  5. By: Gil S. Epstein (Department of Economics, Bar Ilan University); Ira N. Gang (Rutgers University)
    Abstract: Within immigrant society different groups wish to help the migrants in different ways – immigrant societies are multi-layered and multi-dimensional. We examine the situation where there exists a foundation that has resources and that wishes to help the migrants. To do so they need migrant groups to invest effort in helping their country-folk. Migrant groups compete against one another by helping their country-folk and to win grants from the foundation. We develop a model that considers how such a competition affects the resources invested by the groups’ supporters and how beneficial it is to immigrants. We consider two alternative rewards systems for supporters – absolute and relative ranking – in achieving their goals.
    Date: 2010–08
  6. By: Gil S. Epstein (Department of Economics, Bar Ilan University); Yosef Mealem (Netanya Academic College); Shmuel Nitzan (Bar-Ilan University)
    Abstract: Many economic and political decisions are the outcome of strategic contests for a given prize. The nature of such contests can be determined by a designer who is driven by political considerations with a specific political culture. The main objective of this study is to analyze the effect of political culture and of valuation asymmetry on discrimination between the contestants. The weights assigned to the public well being and the contestants' efforts represent the political culture while discrimination is an endogenous variable that characterizes the mechanism allocating the prize. We consider situations under which the optimal bias of the designer is in favor of the contestant with the larger or smaller prize valuation and examine the effect of changes in the political culture and in valuation asymmetry on the designer's preferred discrimination between the contestants. Focusing on the two most widely studied types of contest success functions (deterministic all-pay-auctions and logit CSFs), we show that an all-pay auction is always the preferred CSF from the point of view of the contest designer. This result provides a new political-economic micro foundation to some of the most commonly used models in the contest literature.
    Keywords: Rent Seeking, Political Culture, Discrimination, Contests, Logit contest success function, All-Pay-Auction
    Date: 2010–10
  7. By: Santolini, Raffaella
    Abstract: The empirical literature shows that incumbent politicians move expenditure from one budget item to another before elections and under different electoral systems in order to capture voter consensus and gain re-election. However, little attention has been paid to measurement of the degree of spending items manipulation by incumbents in these circumstances. The aim of this paper is therefore to fill this gap by conducting an empirical investigation on a panel of Italian regions. Measuring the degree of spending items manipulation with the Hirschman-Herfindahl index of fragmentation, I find that total public expenditure is more fragmented when the regional electoral system moves from a proportional towards a mixed electoral system. In the panel dynamic analysis, the manipulation of regional spending items is on average 15%. Weak evidence is also found for more fragmented expenditure before regional elections. In this case, the manipulation is about 6-7%. I refine the analysis by considering only the fragmentation of current and capital expenditure. The results confirm that a shift towards a mixed electoral system produces more expenditure fragmentation in Italian regions. No robust evidence is found for expenditure concentration when regional elections are forthcoming.
    Keywords: Total expenditure fragmentation; Current and capital Expenditure fragmentation; Electoral rule; Electoral cycle
    JEL: H72 D72
    Date: 2011–03–21
  8. By: Rabah Arezki; Markus Bruckner
    Abstract: We examine the effects that variations in the international food prices have on democracy and intra-state conflict using panel data for over 120 countries during the period 1970-2007. Our main finding is that in Low Income Countries increases in the international food prices lead to a significant deterioration of democratic institutions and a significant increase in the incidence of anti-government demonstrations, riots, and civil conflict. In the High Income Countries variations in the international food prices have no significant effects on democratic institutions and measures of intra-state conflict. Our empirical results point to a significant externality of variations in international food prices on Low Income Countries' social and political stability.
    Keywords: Agricultural prices , Cross country analysis , Economic models , Food production , Low-income developing countries , Political economy ,
    Date: 2011–03–22
  9. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Hartmut Kliemt
    Abstract: Unanimous voting as the fundamental procedural source of political legitimacy grants veto power to each individual. We present an axiomatic characterization of a class of bidding processes to spell out the underlying egalitarian values for collective projects of a "productive state". At heart of such procedures is the determination of payments for all possible bid vectors such that equal "profits" according to bids emerge. Along with other intuitive requirements this characterizes procedurally fair bidding rules for advantageous projects of a collectivity.
    Keywords: Unanimity in Collective Decision Making, Buchanan, Wicksell
    JEL: H4 H61 D62 D63 D71
    Date: 2011–03–22
  10. By: Frankel, Jeffrey A. (Harvard University); Bosetti, Valentina (FEEM, Milan)
    Abstract: A new climate change treaty must plug three gaps: the absence of emission targets extending far into the future, the absence of participation by the United States, China, and other developing countries, and the absence of reason to expect compliance. To be politically acceptable, it must obey certain constraints regarding country-by-country economic costs. We offer a framework to assign quantitative emission allocations, across countries, one budget period at a time. The two-part plan: (i) China and other developing countries accept targets at BAU in the coming budget period, the same period in which the US first agrees to cuts below BAU; (ii) all countries are asked in the future to make further cuts in accordance with a formula which sums a Progressive Reductions Factor, Latecomer Catch-up Factor, and Gradual Equalization Factor. An earlier proposal for specific parameter values in the formulas achieved the environmental goal that CO2 concentrations plateau at 500 ppm by 2100. It obeyed our political constraints: keeping the economic cost for every country below thresholds of Y=1% of income in Present Discounted Value, and X=5% of income in the worst period. In this paper we attain a concentration goal of 460 ppm CO2, but only by loosening political constraints.
    JEL: Q54
    Date: 2011–02
  11. By: Eyal Baharad (Department of Economics, Bar Ilan University); Jacob Goldberger (Bar-Ilan University); Moshe Koppel (Bar-Ilan University); Shmuel Nitzan (Department of Economics,Bar-Ilan University)
    Abstract: In certain judgmental situations where a “correct” decision is presumed to exist, optimal decision making requires evaluation of the decision-maker's capabilities and the selection of the appropriate aggregation rule. The major and so far unresolved difficulty is the former necessity. This paper presents the optimal aggregation rule that simultaneously satisfies these two interdependent necessary requirements. In our setting, some record of the voters' past decisions is available, but the correct decisions are not known. We observe that any arbitrary evaluation of the decision-maker's capabilities as probabilities yields some optimal aggregation rule that, in turn, yields a maximum-likelihood estimation of decisional skills. Thus, a skill-evaluation equilibrium can be defined as an evaluation of decisional skills that yields itself as a maximum-likelihood estimation of decisional skills. We show that such equilibrium exists and offer a procedure for finding one. The obtained equilibrium is locally optimal and is shown empirically to generally be globally optimal in terms of the correctness of the resulting collective decisions. Interestingly, under minimally competent (almost symmetric) skill distributions that allow unskilled decision makers, the optimal rule considerably outperforms the common simple majority rule (SMR). Furthermore, a sufficient record of past decisions ensures that the collective probability of making a correct decision converges to 1, as opposed to accuracy of about 0.7 under SMR. Our proposed optimal voting procedure relaxes the fundamental (and sometimes unrealistic) assumptions in Condorcet celebrated theorem and its extensions, such as sufficiently high decision-making quality, skill homogeneity or existence of a sufficiently large group of decision makers.
    Date: 2010–12

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