nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒01‒07
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voting Islamist or Voting secular? An empirical analysis of Voting Outcomes in “Arab Spring” Egypt By May Elsayyad; Shima'a Hanafy
  2. Political Competition and Policy Choices: The Evidence From Agricultural Protection By Jan Fałkowski; Alessandro Olper
  3. (Tax evasion) power to the people: does "early democratization" increase the size of the informal sector? By Adam, Antonis; Kammas, Pantelis
  4. The political economy of trade and migration: Evidence from the U.S. Congress By Conconi, Paola; Facchini, Giovanni; Steinhardt, Max; Zanardi, Maurizio
  5. Voters Prefer More Qualified Mayors, but Does It Matter for Public Finances?: Evidence for Germany By Ronny Freier; Sebastian Thomasius
  6. Political Stability, Corruption and Trust in Politicians By Ingmar Schumacher
  7. Social Fragmentation, Public Goods and Elections: Evidence from China By Gerard Padro i Miquel; Nancy Qian; Yang Yao
  8. Third-Party Opportunism and the Nature of Public Contracts By Marian W. Moszoro; Pablo T. Spiller
  9. Military Expenditures, Inequality, and Welfare and Political Regimes: A Dynamic Panel Data Analysis By Unal Tongur; Adem Yavuz Elveren
  10. The impact of liberalisation policies on income inequality in african countries By Enowbi Batuo, Michael; A. Asongu, Simplice
  11. Do More Powerful Interest Groups have a Disproportionate Influence on Policy? By Zara Sharif; Otto H. Swank
  12. Public Support for European Integration : A comparative analysis. By Kristel Jacquier
  13. Voting functions in the EU-15 By Linda Gonçalves Veiga
  14. Influential Opinion Leaders By Jakub Steiner; Colin Stewart

  1. By: May Elsayyad (Max Planck Institute for Tax Law and Public Finance); Shima'a Hanafy (University of Marburg)
    Abstract: This paper empirically studies the voting outcomes of Egypt’s first parliamentary elections after the Arab Spring. In light of the strong Islamist success in the polls, we explore the main determinants of Islamist vs. secular voting. We identify three dimensions that affect voting outcomes at the constituency level: the socio-economic profile, the economic structure and the electoral institutional framework. Our results show that education is negatively associated with Islamist voting. Interestingly, we find significant evidence which suggests that higher poverty levels are associated with a lower vote share for Islamist parties. Later voting stages in the sequential voting setup do not exhibit a bandwagon effect.
    Keywords: Voting Outcomes, Arab Spring, Political Islam, Sequential Voting
    JEL: D72 D78 O53 P26 Z12 Z13
    Date: 2012
  2. By: Jan Fałkowski (Faculty of Economic Sciences and Centre for Economic Analyses of Public Sector (CEAPS), University of Warsaw); Alessandro Olper (Università degli Studi di Milano and LICOS)
    Abstract: This paper investigates whether political competition plays an important role in determining the level of agricultural protection. In order to do so, we exploit variation in political and economic data from 74 developing and developed countries for the post-war period. We use two measures of political competition: one that captures the extent to which political power can be freely contested regardless of election results and one based on vote share at last parliamentary elections. Our results, based on static and dynamic panel estimators, show unambiguously that the level of support for agriculture is the higher, the higher is the level of political competition.
    Keywords: political competition, constitutional rules, agricultural distortions
    JEL: D72 D78 F13 O13 P16
    Date: 2012
  3. By: Adam, Antonis; Kammas, Pantelis
    Abstract: This paper examines the political economy forces that lead to the creation of the informal sector in an economy. Our analysis treats unofficial economy as an endogenous outcome that may be produced by the conflict for redistribution between different groups of agents. The crucial factor in our analysis is whether the extension of voting franchise takes place before the consolidation of a strong state characterized by solid institutions (this is what we call "early democratization"). When this happens, distributional conflict affects the quality of institutions since the political elites have an incentive to decide weaker institutions which allows them to mitigate the tax burden fallen on their income. In the empirical section, we examine whether countries that experienced “early democratization” are characterized by relatively larger informal sectors. Our findings provide strong empirical evidence in favor of the implication driven by our theoretical model.
    Keywords: Redistribution; Inequality; Tax Evasion
    JEL: H10 H23 H26
    Date: 2012–12–20
  4. By: Conconi, Paola; Facchini, Giovanni; Steinhardt, Max; Zanardi, Maurizio
    Abstract: Over the last decades, the United States has become increasingly integrated in the world economy. Very low trade barriers and comparatively liberal migration policies have made these developments possible. What drove US congressmen to support the recent wave of globalization? While much of the literature has emphasized the differences that exist between the political economy of trade and migration, in this paper we find that important similarities should not be overlooked. In particular, our analysis of congressional voting between 1970 and 2006 suggests that economic drivers that work through the labor market play an important role in shaping representatives’ behavior on both types of policies. Representatives from more skilled-labor abundant districts are more likely to support both trade liberalization and a more open stance vis-à-vis unskilled immigration. Still, important systematic differences exist: welfare state considerations and network effects have an impact on the support for immigration liberalization, but not for trade; Democratic lawmakers are systematically more likely to support a more open migration stance than their Republican counterparts, and the opposite is true for trade liberalization.
    Keywords: immigration reforms; trade reforms
    JEL: F22 J61
    Date: 2012–12
  5. By: Ronny Freier; Sebastian Thomasius
    Abstract: This paper studies the importance of politician's qualification, in terms of education and experience, for fiscal outcomes. The analysis is based on a large panel for 2,031 German municipalities for which we have collected information on municipal budgets as well as the election results and qualification levels of mayoral candidates. We principally use a Regression Discontinuity Design focusing on close elections to estimate causal effects. We find that mayors with prior experience in office indeed tend to reduce the level of local public debt, lower total municipal expenditures and decrease the local taxes. In contrast, the education level of the mayor exerts no significant effects on the overall fiscal performance of the municipality. The results are partly surprising as both education and experience are shown to matter greatly in the electoral success of mayoral candidates.
    Keywords: Mayoral elections, regression discontinuity design, politician's education and experience, fiscal outcomes
    JEL: D72 H11 H72
    Date: 2012
  6. By: Ingmar Schumacher (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, IPAG - Business School)
    Abstract: In this article we develop a dynamic model where an endogenous evolution of trust impacts a politician's choice for bribe-taking and tax re-distribution. The politician obtains utility from net income that comes from his wage income, tax embezzlements and bribe-taking, and he also has incentives for tax re-distribution. The higher the tax embezzlements and the more bribes the politician takes the lower his citizens' trust and the less likely will he be re-elected. We support the evolution of trust with an econometric investigation. We analyze the necessary and su cient conditions, and nd that withholding taxes and taking bribes may be complements or substitutes for a politician, depending on the politician's incentives for tax re-distribution. Without these incentives, tax embezzlement and bribe taking are necessarily substitutes. With su ciently strong incentives, we nd re-distribution and bribe-taking may become complements. Complements implies that the politician, at least partly, increases bribe-taking because this allows him to increase re-distribution, which aids his additional motives for tax re-distribution. Based on comparative statics at steady state we also nd that the higher the politician's wage the lower the bribe-taking and the higher the trust; stronger social capital leads to less bribe-taking and higher levels of trust; improvements in electoral accountability induce a decrease in bribing while trust increases.
    Keywords: : trust; corruption; political stability; bribe; dynamic model.
    Date: 2012–12–10
  7. By: Gerard Padro i Miquel; Nancy Qian; Yang Yao
    Abstract: This study examines how the economic effects of elections in rural China depend on voter heterogeneity, for which we proxy with religious fractionalization. We first document religious composition and the introduction of village-level elections for a nearly nationally representative sample of over two hundred villages. Then, we examine the interaction effect of heterogeneity and the introduction of elections on village-government provision of public goods. The interaction effect is negative. We interpret this as evidence that voter heterogeneity constrains the potential benefits of elections for public goods provision.
    JEL: O38 O43 P16 P35
    Date: 2012–12
  8. By: Marian W. Moszoro; Pablo T. Spiller
    Abstract: The lack of flexibility in public procurement design and implementation reflects public agents' political risk adaptation to limit hazards from opportunistic third parties – political opponents, competitors, interest groups – while externalizing the associated adaptation costs to the public at large. Reduced flexibility limits the likelihood of opportunistic challenge lowering third parties' expected gains and increasing litigation costs. We provide a comprehensible theoretical framework with empirically testable predictions.
    JEL: D23 D72 D73 D78 H57
    Date: 2012–12
  9. By: Unal Tongur (Department of Economics, METU); Adem Yavuz Elveren (Department of Economics, METU and Sutcu Imam University)
    Abstract: The goal of this paper is to investigate the relationship between type of welfare regimes and military expenditures. There is a sizeable empirical literature on the development of the welfare state and on the typology of the welfare regimes. There appear to be, however, no empirical studies that examine welfare regimes with special attention to military spending. This study aims at providing a comprehensive analysis on the topic by considering several different welfare regime typologies. To do so, we use dynamic panel data analysis for 37 countries for the period of 1988-2003 by considering a wide range of control variables such as type of political regimes, inequality measures, number of terrorist events, and size of the armed forces. Our findings, in line with the literature, show that there is a positive relationship between income inequality and share of military expenditures in the central government budget, and that the number of terrorist events is a significant factor that affects both the level of military expenditure and inequality. Also, the paper reveals a significant negative relationship between social democratic welfare regimes and military expenditures. 
    Keywords: Military spending, welfare regimes, political regimes, income inequality
    JEL: C33 D30 H56 I30
    Date: 2012–12
  10. By: Enowbi Batuo, Michael; A. Asongu, Simplice
    Abstract: Despite over three decades of Liberalisation policies in Africa, income-inequality has stayed persistently high. Using updated panel data of 26 African countries spanning the period 1996-2010, this study examines the effect of liberalisation policies with particular focus on financial, trade, institutional, political and economic liberalisations on income-inequality. We find: that financial liberalisation has a levitated income-redistributive effect with the magnitude of the de jure measure (KAOPEN) higher than that of the de facto measure (FDI); that exports, trade and ‘freedom to trade’ have an equality incidence on income-distribution; and that institutional and political liberalisation has a negative impact and we also find that, economic freedom has a negative income-redistributive effect possibly because of the weight of its legal component. The impact of these policies implications are discussed in detail in this study.
    Keywords: Liberalisation Policies; Income Inequality; Poverty; Africa
    JEL: O11 F4 O55 F5 O15 C23 F3 I32
    Date: 2012–06
  11. By: Zara Sharif (Erasmus University Rotterdam); Otto H. Swank (Erasmus University Rotterdam)
    Abstract: Decisions-makers often rely on information supplied by interested parties. In practice, some parties have easier access to information than other parties. In this light, we examine whether more powerful parties have a disproportionate influence on decisions. We show that more powerful parties influence decisions with higher probability. However, in expected terms, decisions do not depend on the relative strength of interested parties. When parties have not provided information, decisions are biased towards the less powerful parties. Finally, we show that compelling parties to supply information destroys incentives to collect information.
    Keywords: information collection; communication; interest groups; decision-making
    JEL: D72 D78 D82 H39
    Date: 2012–12–05
  12. By: Kristel Jacquier (Centre d'Economie de la Sorbonne)
    Abstract: This paper proposes to study how socio-economic characteristics shape preferences in European matters. It is assumed that social groups threatened by liberalization tend to be more euro-skeptical than others. This hypothesis is tested using individual-level data from two rounds of the European Social Survey. Controlling for national fixed effects and income, we focus on variables of occupational status (International Standard Classification of Occupations ISCO-88, and current occupation). Finally, we include a variable of subjective partisan affiliation to make sure that our results are not concealing a left/right positioning. We argue that the economic status of agents plays a crucial role in explaining cross-sectional variations in public support for the European process in each member state. Additionally, the partisan affiliation confirms that in European matters, socio-economic forces are not a mere reflection of the left/right spectrum.
    Keywords: European integration, political economy, globalization, survey research.
    JEL: P16 F55 C25
    Date: 2012–12
  13. By: Linda Gonçalves Veiga (Universidade do Minho - NIPE)
    Abstract: This paper examines if the European integration process, by transferring policy instruments to supra-national authorities, has affected voters’ evaluations of governments’ economic performance at electoral periods. The analysis is implemented on a panel of 15 EU countries, from 1970 to 2011. Results suggest that before the Maastricht Treaty, citizens held incumbents responsible for GDP growth, and for the evolution of inflation, particularly when measured relative to the EU average. After the Maastricht Treaty, only fiscal policy variables show up as statistically significant. The capacity to control the budget deficit appears as the main determinant of electoral results, especially during the current economic crisis.
    Keywords: Vote functions, EU-15, economics, deficits
    JEL: H6 D72 E6 F02
    Date: 2012
  14. By: Jakub Steiner; Colin Stewart
    Abstract: We present a two-stage coordination game in which early choices of experts with special interests are observed by followers who move in the second stage. We show that the equilibrium outcome is biased toward the experts' interests even though followers know the distribution of expert interests and account for it when evaluating observed experts' actions. Expert influence is fully decentralized in the sense that each individual expert has a negligible impact. The bias in favor of experts results from a social learning effect that is multiplied through a coordination motive. We show that the total effect can be large even if the direct social learning effect is small. We apply our results to the diffusion of products with network externalities and the onset of social movements.
    Keywords: voting; coordination; experts
    JEL: D72 D82 D83
    Date: 2012–10

This nep-pol issue is ©2013 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.