nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒11‒02
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. It's the occupation, stupid! Explaining candidates' success in low-information elections By Mario Mechtel
  2. A Dynamic Duverger's Law By Jean Guillaume Forand; Vikram Maheshri
  3. Choosing the Form of Government: Theory and Evidence from Brazil By Marcos Yamada Nakaguma
  4. Conflict and Social and Political Preferences: Evidence from World War II and Civil Conflict in 35 European countries By Pauline Grosjean
  5. Signaling Competence in Elections By Honryo, Takakazu
  6. Politics by numbers? An exploration of councillors’ apparent use of financial information during the budget discussion in Flemish municipal councils By B. BUYLEN; J. CHRISTIAENS
  7. Political Learning and Officials’ Motivations: An Empirical Analysis of the Education Reform in the State of São Paulo By Thomaz M. F. Gemignani; Ricardo de Abreu Madeira
  8. Economic Sanctions and The Sanctions Paradox: A Post-Sample Validation of Daniel Drezner’s Conflict Expectations Model By Hillebrand, Evan; Bervoets, Jeremy
  9. Technology, power and the political economy of inequality By Frederick Guy; Peter Skott
  10. Trade Imbalances and Wage Inequality By Paolo Epifani; Rosario Crinò
  11. Engaging in Corruption: The Influence of Cultural Values and Contagion Effects at the Micro Level By Lee, Wang-Sheng; Guven, Cahit
  12. Aid Eectiveness in Times of Political Change: Lessons from the Post-Communist Transition By Olofsgård, Anders; Perrotta, Maria; Frot, Emmanuel
  13. Preferential Polarization Measures By Ali Ihsan Ozkes

  1. By: Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: Do voters use ballot paper information on the personal characteristics of political candidates as cues in low-information elections? Using a unique dataset containing 4423 political candidates from recent elections in Germany, we show that candidates’ occupations do play an important role in their electoral success. The occupational impact is far greater than gender or doctoral degree effects for a large number of occupations. We discuss three possible explanations for these “occupational effects”: (a) an occupation’s public reputation, (b) the extent to which individuals carrying out certain occupations are known within their communities, and (c) occupation specific competence related to issues relevant for local politics. Looking at polls on the reputation/ prestige of certain jobs, we find a strong correlation between an occupation’s reputation and the electoral success of a candidate carrying out this occupation. Therefore, voters appear to use occupational reputation as a cue in low-information elections.
    Keywords: political economy, low-information elections, informational shortcuts, occupational reputation
    JEL: D72 D7
    Date: 2013–10
  2. By: Jean Guillaume Forand (University of Waterloo); Vikram Maheshri (University of Houston)
    Abstract: Electoral systems promote strategic voting and aect party systems. Duverger (1951) proposed that plurality rule leads to bi-partyism and proportional representation leads to multi-partyism. We show that in a dynamic setting, these static eects also lead to a higher option value for existing minor parties under plurality rule, so their incentive to exit the party system is mitigated by their future benefits from continued participation. The predictions of our model are consistent with multiple cross-sectional predictions on the comparative number of parties under plurality rule and proportional representation. In particular, there could be more parties under plurality rule than under proportional representation at any point in time. However, our model makes a unique time-series prediction: the number of parties under plurality rule should be less variable than under proportional representation. We provide extensive empirical evidence in support of these results.
    Keywords: Duverger's Law, Electoral Competition, Dynamic Political Economy
    JEL: H1
    Date: 2013–10–22
  3. By: Marcos Yamada Nakaguma
    Abstract: This paper proposes a model to study the main factors that influence the preferences of different population groups between presidential and parliamentary systems. Our theory suggests that the parliamentary regime leads to a type of fiscal decentralization in the form of more transfers to constituencies. Ceteris paribus, the poor groups in the population tend to prefer a presidential system relatively more than the rich, since the lower quality of their local accountability institutions (e.g. local media and judicial courts) makes them more vulnerable to the expropriation of rents by their legislators. We also show that in order to perform adequately a parliamentary regime depends on the existence of a class of politicians that can be trusted to represent well the interests of voters. Our model is able to account for the main stylized facts emerging from an analysis of referendum data from Brazil.
    Keywords: Constitutions; political regime; presidential system; parliamentary system
    JEL: D02 D7 H0
    Date: 2013–10–29
  4. By: Pauline Grosjean (School of Economics, Australian School of Business, the University of New South Wales)
    Abstract: This paper uses new micro-level evidence from a nationally representative survey of 39,500 individuals in 35 countries to shed light on how individual experiences of conflict shape political and social preferences. The investigation covers World War II and recent civil conflict. Overwhelmingly, the results point to the negative and enduring legacy of war-related violence on political trust and perceived effectiveness of national institutions, although the effects are heterogeneous across different types (external vs. internal) and outcomes (victory vs. defeat) of conflict. Conflict spurs collective action, but of a dark nature, one associated with further erosion of social and political trust.
    Keywords: Conflict, social capital, state capacity, Europe, Caucasus, Central Asia
    JEL: N24 O57 Z13
    Date: 2013–10
  5. By: Honryo, Takakazu
    Abstract: We analyze how political candidates can signal their competence and show that polarization might be a way of doing this. For this purpose, we study a unidimensional Hotelling-Downs model of electoral competition in which a fraction of candidates have the ability to correctly observe a policy-relevant state of the world. We show that candidates tend to polarize, even in the absence of policy bias. This is because proposing an extreme platform has a competence signaling effect and has a strictly higher probability of winning than proposing a median platform. The degree of polarization depends on how uncertain is the state of the world.
    Date: 2013–10–04
    Abstract: Previous studies demonstrate that there is skepticism about politicians’ use of financial information. Although this issue is generally recognized in literature, only very few researchers focused on real use of financial information in political budgeting practice. While many studies discussed various technical and political budgeting aspects (e.g. political budget cycles, reform rhetoric, introduction accrual budgeting ….) the use of financial information in the area of budgeting is often overlooked. This paper contributes to our understanding of financial information use by politicians, especially through its adoption of an innovative method of data collection and - analysis, i.e. categorizing the minutes of budget debates in municipal councils. Politicians’ apparent financial information use is measured by analyzing the presence of financial information in councilors’ contribution during the budget discussion in Flemish municipal councils. Firstly, we bring a quantitative overview of the reference to financial information in the budget discussion. Secondly, we assess the impact of some political and economic factors on politicians’ use. Data are collected from 121 councils’ minutes of the budget discussion combined with interviews of key witness civil servants. Results reveal a predominance of budgetary information in the discussion and significant influence of both political and economic factors.
    Keywords: New Public Management, Financial information, Councilors, Budget.
    Date: 2013–06
  7. By: Thomaz M. F. Gemignani; Ricardo de Abreu Madeira
    Abstract: We investigate the occurence of social learning among government officials in a context of decentralization of political responsibilities - the schooling decentralization reform of the state of São Paulo - and use it to analyze officials' motivations driving the adhesion to that program. We explore how the information exchange about the newly adopted tasks is configured and which aspects about the returns of decentralization are mostly valued by officials in their learning process. In particular, we try to determine to what extent the adhesion to the reform was due to electoral motivations or, rather, to concerns about the quality of public education provision. We present evidence that social learning configures a relevant factor in the reform implementation and find that mayors are more likely to adhere to the program upon the receipt of good news about the electoral returns of decentralization. On the other hand, experiences by information neighbors that turn out to be successful in improving the public provision seem to be ignored in mayors' decisions for decentralization. The argument for electoral motivations is further supported by evidence that officials tend to be more responsive to information transmitted by neighbors affiliated to the same party as their own.
    Keywords: Electoral Incentives; Learning; Decentralization
    JEL: D78 D83 I28
    Date: 2013–10–22
  8. By: Hillebrand, Evan; Bervoets, Jeremy
    Abstract: Abstract: Daniel Drezner’s 1999 book The Sanctions Paradox used case studies from the former Soviet Union in the 1990s to test his game-theoretic model—the Conflict Expectations Model--of sanctions behavior. The model purports to help predict whether or not a “sender” will resort to economic sanctions to extract concessions from a “target” and whether the target will concede or resist. The model explained quite well the amount of concessions demanded by Russia in the 1990s and the degree of compliance by the 14 new states. Russia is still using economic leverage to reap economic advantage and political influence over its former constituent republics. In this paper we examine the pressures exerted by Russia in the 2000s and their results, using Drezner’s model to see if the model performed as well as before. We found (1) that Russia continued to make extensive use of economic sanctions to influence political decisions in the NIS in the 2000s, (2) that the sanctions were considerably less effective than they had been in the 1990s, (3) that the Drezner model continued to shed light on the sanctions effort but was less accurate in its predictions than it had been in the 1990s. One tentative conclusion from this analysis is that Russia’s sanctions successes in the 1990s created a strong desire in many of the NIS to reduce Russia’s economic leverage over them by diversifying their trade and energy links. It is possible that a less aggressive Russian strategy in the 1990s – though it might have brought smaller short term gains – could have better served Russian’s long term interests
    Keywords: Russia, Sanctions, Economic, Conflict, Expectations, CIS
    JEL: F51 N4 P2
    Date: 2013–05–02
  9. By: Frederick Guy (Department of Management, Birkbeck, University of London); Peter Skott (Department of Economics, University of Massachusetts, Amherst)
    Abstract: Technology can affect the distribution of income directly via its influence on both the bargaining power of different parties and the marginal product of different factors of production. This paper focuses mainly on the first route. The role of power is transparent in the case of medieval choke points but modern network technologies have similar features. There is also substantial evidence -- from truckers and retail clerks to CEOs -- that power affects the determination of wages. But power relations inevitably have institutional dimensions; regulatory frameworks influence industry structures and the market power of large companies as well as the parameters that determine the earnings of different groups of workers. The institutional framework is arrived at through complex social and political processes; technology, however, may exert some influence on the course of those processes.
    Keywords: Power biased technological change, network technologies, increasing returns, winnertakes- all, efficiency wage, Fordism, information technology, Great Compression
    JEL: O33 J31
    Date: 2013
  10. By: Paolo Epifani (Bocconi University); Rosario Crinò (CEMFI)
    Abstract: We argue that the large and growing North-South trade imbalances arisen over the last three decades may have exacerbated wage inequality worldwide. In particular, we show that in a standard Heckscher-Ohlin setup with a continuum of goods, a Southern trade surplus is associated with higher skill premia in both the North and the South. Conversely, a Northern trade surplus leads to lower skill premia worldwide. To test these predictions, we extend the methodology proposed by Chun Zhu and Trefler (2005) by computing how a change in trade surpluses/deficits impacts on each country's average skill-intensity of manufacturing exports. Using a large panel of more than 100 countries observed for more than 30 years, we find strong and robust evidence that an increase in the trade surplus by a skill-poor (skill-rich) country is associated with an increase (reduction) in the skill-intensity of exports. Our results also suggest that the impact of trade imbalances on the skill composition of exports is quantitatively larger than that of other likely determinants emphasized by the trade literature, such as trade liberalization, endowment changes, offshoring or Southern catch-up.
    Date: 2013
  11. By: Lee, Wang-Sheng (Deakin University); Guven, Cahit (Deakin University)
    Abstract: Previous empirical work on corruption has generally been cross-country in nature and focused on utilizing country-level corruption ratings. By using micro-level data for over 20 European countries that directly measure individual characteristics, corruption experiences, gender roles, trust and values to examine the determinants of corruption, this paper goes beyond the search for associations between various macro factors and perceptions of corruption that is prevalent in the economic literature. One focus of the paper is on how cultural norms such as gender roles and risk preferences influence corruption and whether there are gender differences in the determinants of corruption. In addition, this paper also seeks to determine if there are contagion effects in corruption at the micro level. Using a seemingly unrelated probit approach, this paper provides empirical estimates of how past experiences with corruption affects both how bribery is viewed and the actual act of offering a bribe.
    Keywords: risk preference, gender roles, corruption, seemingly unrelated probit
    JEL: K42 O17
    Date: 2013–10
  12. By: Olofsgård, Anders (Stockholm Institute of Transition Economics); Perrotta, Maria (Stockholm Institute of Transition Economics); Frot, Emmanuel (Microeconomix)
    Abstract: We argue that the tilt towards donor interests over recipient needs in aid allocation and practices may be particularly strong in new partnerships. Using the natural experiment of Eastern transition we find that commercial and strategic concerns influenced both aid flows and entry in the first half of the 1990s, but much less so later on. We also find that fractionalization increased and that early aid to the region was particularly volatile, unpredictable and tied. Our results may explain why aid to Iraq and Afghanistan has had little development impact and serve as warning for Burma and Arab Spring regimes.
    Keywords: foreign aid; development
    JEL: F35
    Date: 2013–10–22
  13. By: Ali Ihsan Ozkes (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, Istanbul Bilgi University - [-])
    Abstract: Given opinions of members of a society on a set of policies, as ordinal preferences; an approach to polarization is introduced. The concept here is considering polarization in a society as an aggregation of pairwise antagonisms, which depend on identi fication within groups as well as alienation among groups. Among measures which comply to this sort of conceptualization, a class of functions which satisfi es certain plausible properties is introduced for the case of three alternatives. This class coincides with the class characterized for unidimensional spaces in Esteban and Ray (1994).
    Keywords: polarization measures, ordinal preferences, alienation, identi cation
    Date: 2013–10–23

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