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on Positive Political Economics |
| By: | Juan Luis Jiménez (Department of Applied Economic Analysis. University of Las Palmas de Gran Canaria); Carmen García (Department of Applied Economic Analysis. University of Las Palmas de Gran Canaria) |
| Abstract: | political corruption at the local level boomed as well. In fact, it increased from 7 publicly denounced cases from 1999-2003 to at least 180 in the last legislative period (2007-2011). In this paper, we explore this phenomenon in two related ways: how it has affected voting results and political participation, and whether the wrongdoing of local politicians has undermined the voters’ confidence in them. We constructed a socioeconomic municipality database that matched polling results and corruption cases and then estimated a voting-share equation by difference-in-difference and matching techniques. Our results confirm that the voters’ attitude towards corruption is significantly different with respect to parties on the right or the left. In fact, after an imputation in a local corruption case, abstention increases by an average 1.8 percentage points, left-parties’ voting share is reduced by approximately 2 percentage points, while right-parties’ share increases approximately 3 points. However, if the imputed candidate stands for re-election again, right-parties voting share is reduced by 4.4 points, but right-wing corruption at superior levels also increases voting share. |
| Keywords: | Voters’ attitude; Political parties. JEL classification: D02; D73; P16. |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201212&r=pol |
| By: | Javier G. Polavieja (IMDEA Social Sciences Institute) |
| Abstract: | This paper investigates the impact of economic vulnerability and economic recession on political trust, satisfaction with democracy and attitudes towards welfare-state redistribution across different EU countries. I argue that these set of attitudes are crucial in defining public support for the European model of social capitalism, historically characterized by the combination of national democratic institutions and extensive welfare provision. I further content that the impact of recession on citizens’ support for national political institutions could have been particularly severe in Euro-zone countries since national governments inside the European Monetary Union lack standard policy instruments to combat recession. Following the economic voting literature, I distinguish between recession effects that are triggered by the individual experience of economic hardship (egocentric effects) and those triggered by citizens’ dissatisfaction with the economic situation of the country as a whole (sociotropic effects). Applying two-step regression techniques to a pool of the 2004 and the 2010 rounds of the European Social Survey, I investigate individual-level egocentric and sociotropic effects on political trust, democratic satisfaction and attitudes to redistribution, as well as direct macro-level recession effects on the typical citizen for both countries inside and outside the Euro zone. I find significant recession effects for political trust and satisfaction with democracy in Euro-zone countries. The erosion of political trust and satisfaction with democracy is sizeable in Ireland, Slovenia and Spain and reaches truly alarming proportions in the case of Greece. The evidence on recession effects on attitudes to redistribution is, however, inconclusive. Implications are discussed. |
| Keywords: | economic recession, political trust, satisfaction with democracy, attitudes towards redistribution; europe; welfare states; monetary union; legitimacy; european social survey |
| Date: | 2012–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2012-08&r=pol |
| By: | Falck, Oliver; Gold, Robert; Heblich, Stephan |
| Abstract: | This paper analyses the effect of information disseminated by the Internet on voting behavior. We address endogeneity in Internet availability by exploiting regional and technological peculiarities of the preexisting voice telephony network that hinder the roll-out of fixed-line broadband infrastructure for high-speed Internet. We find small negative effects of Internet availability on voter turnout, and no evidence that the Internet systematically benefits single parties. Robustness tests including placebo estimations from the pre-Internet era confirm our results. We relate differences in the Internet effect between national and local elections to a crowding out of national but not local newspapers. |
| Keywords: | Elections; Political Economy; Instrumental Variables; Mass Media; Inte rnet |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2012-07&r=pol |
| By: | Faravelli, Marco; Sanchez-Pages, Santiago |
| Abstract: | Proponents of proportional electoral rules often argue that majority rule depresses turnout and may lower welfare due to the 'tyranny of the majority' problem. The present paper studies the impact of electoral rules on turnout and social welfare. We analyze a model of instrumental voting where citizens have private information over their individual cost of voting and over the alternative they prefer. The electoral rule used to select the winning alternative is a combination of majority rule and proportional rule. Results show that the above arguments against majority rule do not hold in this set up. Social welfare and turnout increase with the weight that the electoral rule gives to majority rule when the electorate is expected to be split, and they are independent of the electoral rule employed when the expected size of the minority group tends to zero. However, more proportional rules can increase turnout within the minority group. This effect is stronger the smaller the minority group. We then conclude that majority rule fosters overall turnout and increases social welfare, whereas proportional rule fosters the participation of minorities. |
| Keywords: | Costly voting, Incomplete information, Majority rule, Proportional rule, Turnout, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:310&r=pol |
| By: | Enriqueta Aragonès; Micael Castanheira; Marco Giani |
| Abstract: | Politics must tackle multiple issues at once. In a first-best world, political competition constrains parties to prioritize issues according to the voters' true concerns. In the real world, the opposite also happens: parties manipulate voter priorities by emphasizing issues selectively during the political campaign. This phenomenon, known as priming, should allow parties to pay less attention to the issues that they intend to mute. We develop a model of endogenous issue ownership in which two vote-seeking parties (i) invest to attract voters with "better" policy proposals and (ii) choose a communication campaign to focus voter attention on specific issues. We identify novel feedbacks between communication and investment. In particular, we find that stronger priming effects can backfire by constraining parties to invest more resources in all issues, including the ones they would otherwise intend to mute. We also identify under which conditions parties prefer to focus on their "historical issues" or to engage in issue stealing. Typically, the latter happens when priming effects are strong, and historical reputations differentiates parties less. |
| Keywords: | party strategy, salience, issue selection and ownership, priming |
| JEL: | D72 H11 |
| Date: | 2012–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:903.12&r=pol |
| By: | Suresh Naidu |
| Abstract: | This paper estimates the political and economic effects of the 19th century disenfranchisement of black citizens in the U.S. South. Using adjacent county-pairs that straddle state boundaries, I examine the effect of voting restrictions on political competition, public goods, and factor markets. I find that poll taxes and literacy tests each lowered overall electoral turnout by 8-22% and increased the Democratic vote share in elections by 1-7%. Employing newly collected data on schooling inputs, I show that disenfranchisement reduced the teacher-child ratio in black schools by 10-23%, with no significant effects on white teacher-child ratios. I develop a model of suffrage restriction and redistribution in a 2-factor economy with migration and agricultural production to generate sufficient statistics for welfare analysis of the incidence of black disenfranchisement. Consistent with the model, disenfranchised counties experienced a 3.5% increase in farm values per acre, despite a 4% fall in the black population. The estimated factor market responses suggest that black labor bore a collective loss from disenfranchisement equivalent to at least 15% of annual income, with landowners experiencing a 12% gain. |
| JEL: | H7 N11 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18129&r=pol |
| By: | Micael Castanheira (ECARES, Université Libre de Bruxelles, Belgium); Gaëtan Nicodème (European Commission, CESifo, CEPR and Université Libre de Bruxelles, Belgium); Paola Profeta (Università Bocconi, Econpubblica and Dondena, Italy, CESifo) |
| Abstract: | Political constraints and incentives are the true driver of tax reforms. This paper reviews the political economics literature on personal income tax systems and reforms to see how political mechanisms help explain tax reforms. We take some of the implications of these theories to the data using LABREF, a database that identifies labor tax reforms in the European Union for the period 2000-2007, and control for economic and labor market factors. We find that political variables carry more weight than economic variables, and we show empirical regularities that support political economy theories. We also find that governments tended to reform more in better economic times, engaging in pro-cyclical behavior. |
| Keywords: | political economy, taxation, personal income tax, LABREF |
| JEL: | H11 H21 H24 P16 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cccrwp:2012-08-ccr&r=pol |
| By: | Enriqueta Aragonès; Micael Castanheira; Marco Giani |
| Abstract: | Politics must tackle multiple issues at once. In a first-best world, political competition constrains parties to prioritize issues according to the voters’ true concerns. In the real world, the opposite also happens: parties manipulate voter priorities by emphasizing issues selectively during the political campaign. This phenomenon, known as priming, should allow parties to pay less attention to the issues that they intend to mute. We develop a model of endogenous issue ownership in which two vote-seeking parties (i) invest to attract voters with “better†policy proposals and (ii) choose a communication campaign to focus voter attention on specific issues. We identify novel feedbacks between communication and investment. In particular, we find that stronger priming effects can backfire by constraining parties to invest more resources in all issues, including the ones they would otherwise intend to mute. We also identify under which conditions parties prefer to focus on their “historical issues†or to engage in issue stealing. Typically, the latter happens when priming effects are strong, and historical reputations differentiates parties less. |
| Keywords: | party strategy, salience, issue selection and ownership, priming |
| JEL: | D72 H11 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:641&r=pol |
| By: | Gersbach, Hans; Müller, Markus |
| Abstract: | This paper analyzes optimal re-election bars when incumbents gain socially valuable experience in office. We develop a two-period model in which the output of a public good depends on an office-holder's effort, ability and experience. When campaigning for election to an open seat in the first period, candidates can make binding offers of the minimum share of the votes they must obtain to be re-elected in the second period, should they win in the first. We prove that, in equilibrium, both candidates offer the same vote-share threshold, that it exceeds 50 percent, and that it is socially optimal. The higher threshold increases the expected effort over both periods and tends to raise the expected level of ability of office-holders in the second. Together, these effects outweigh the expected loss of incumbents' acquired experience, which results from their reduced chances of getting re-elected with the higher bar. The socially optimal vote threshold is increasing in the value of experience. All of the above conclusions would hold if the optimal threshold were set instead by law. |
| Keywords: | elections; experience; incumbency advantage; political contracts; vote-share thresholds |
| JEL: | D7 D82 H4 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9005&r=pol |
| By: | Jørn Rattsø (Norwegian University of Science and Technology); Rune J. Sørensen (Norwegian Business School (BI)) |
| Abstract: | Government enterprises are vulnerable to political intervention and influence of various interest groups. The theoretical literature emphasizes the role multiple and conflicting goals that distorts incentives and accountability. We offer empirical evidence of the importance of the political ownership with respect to internal and external interests in the enterprise. Our theoretical starting point is a veto player model of the relationship between two political parties and an interest group. The interest groups can exploit conflict between two political parties regarding the goals of the enterprise, and they can hold back the capacity to reform and restructure the enterprise. The empirical analyses are based on a survey questionnaire to board members and CEOs of the major government enterprises in Norway. The survey offers enterprise-specific measures of party agreement/conflict and interest group influence. The estimates suggest that political conflict increases interest group influence, both internal and external, and thereby holds back restructuring of the enterprise. Furthermore, when current revenues come from government grants, interest group influence tends to be extensive. In an extension of the analysis we show that media attention implies that board members are held more accountable. |
| Keywords: | Veto Player, Interest Group, Political Conflict, Corporate Governance |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cccrwp:2012-02-ccr&r=pol |
| By: | Abmann, Christian; Henning, Christian H.C.A.; Krampe, Eva |
| Abstract: | This paper empirically investigates the interaction of formal and informal political institutions as well as lobbying in determining the ability of agriculture to avoid taxation or attract government transfers. Based on our theory we identify specic interaction eects between district size and characteristic political as well as demographic framework constellation, that determine two dierent regimes, e.g. an u-shape and an inverse u-shape relation between district size and the level of agricultural protection. Further, our theory implies specic dierent patterns of how these interaction eects impact on agricultural protection levels in developing and industrialized countries. Using time-series-cross-section (TSCS) data, this paper tackles the quantitative assessment of the theoretical implications. We estimate the latent regime of agricultural protection and assess the opposing quantitative relationships. We check our results for robustness concerning dynamic specication issues and latent heterogeneity. Furthermore we gauge the possible endogeneity of institutions via an extended treatment framework. |
| Keywords: | Political Institutions, Political Economy of Agricultural Protectionism, Switch- ing Regimes, Endogeneity of political Institutions, Environmental Economics and Policy, |
| Date: | 2012–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124885&r=pol |
| By: | David Coyne (Federal Reserve Bank of Boston, USA); Chih Ming Tan (Clark University, USA) |
| Abstract: | We investigate the effects of political institutions on economic growth. We specifically explore this relationship while controlling for heterogeneity and model uncertainty. We use threshold regression (Hansen (2000)) to search for possible nonlinearities and/or interaction effects with respect to political institutions. We also implement a novel approach to account for theory uncertainty by applying Bayesian model averaging in the threshold regression context. We find that less democratic countries, specifically those with less competitiveness in executive recruitment, follow a different growth process than those with higher competitiveness. |
| Keywords: | Economic Growth, Institutions, Threshold Regression, Regression Trees, Bayesian Model Averaging |
| JEL: | C21 C51 O43 O47 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:36_12&r=pol |
| By: | Elinder, Mikael (Uppsala University); Jordahl, Henrik (Research Institute of Industrial Economics) |
| Abstract: | Given the intensive and ideologically charged debate over the use of private contractors for publicly funded services, it is somewhat surprising that many social scientists have preferred to explain government outsourcing by the pursuit of economic efficiency. Starting out from different theories, we investigate political explanations of government outsourcing using a Swedish data set in which outsourcing varies between municipalities and over time, as well as between services. Our identification strategy focuses on two services with similar contracting problems and local market conditions: preschools and primary schools. We study a period in which Swedish municipalities had full discretion in the provision of preschools, while their influence on the private provision of primary education was limited by a national voucher system. The comparison of preschools with primary schools in a difference-in-differences model suggests that the political color of the ruling majority influences outsourcing, which is consistent with the Citizen Candidate model of representative democracy. |
| Keywords: | outsourcing, ideology, public provision, contracting out, child care, education |
| JEL: | D23 H11 H40 L33 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6632&r=pol |