nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒11‒14
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Path-Breakers: How Does Women’s Political Participation Respond to Electoral Success? By Sonia Bhalotra; Irma Clots-Figueras; Lakshmi Iyer
  2. Voter Turnout and the Size of Government By Aggeborn, Linuz
  3. The political economics of redistribution, inequality and tax avoidance By Bethencourt, Carlos; Kunze, Lars
  4. Can political empowerment help economic empowerment ? women leaders and female labor force participation in India By Ghani, Ejaz; Mani, Anandi; O'Connell, Stephen D.
  5. Power Brokers: Middlemen in Legislative Bargaining By Matias Iaryczower; Santiago Oliveros
  6. Religious origins of democracies and dictatorships By Grigoriadis, Theocharis
  7. Experimentation in Federal Systems By Steven Callander; Bård Harstad
  8. The political polarization index By Marina Azzimonti

  1. By: Sonia Bhalotra (University of Essex); Irma Clots-Figueras (Universidad Carlos III de Madrid); Lakshmi Iyer (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: This paper analyzes the effect of a woman's electoral victory on women's subsequent political participation. Using the regression discontinuity afforded by close elections between women and men in India's state elections, we find that a woman winning office leads to a large and significant increase in the share of female candidates from major political parties in the subsequent election. This stems mainly from an increased probability that previous women candidates contest again, an important margin in India where a substantial number of incumbents do not contest re-election. There is no significant entry of new female candidates, no change in female or male voter turnout and no spillover effects to neighboring areas. Further analysis points to a reduction in party bias against women candidates as the main mechanism driving the observed increase in women's candidacy.
    JEL: J16 J71 P16
    Date: 2013–11
  2. By: Aggeborn, Linuz (Uppsala Center for Fiscal Studies)
    Abstract: This paper investigates the causal link between voter turnout and policy outcomes related to the size of government. Tax rate and public expenditures are the focal policy outcomes in this study. To capture the causal mechanism, Swedish and Finnish municipal data are used and a constitutional change in Sweden in 1970 is applied as an instrument for voter turnout in local elections. In 1970, Sweden moved from having separate election days for different levels of government,among other things, to a system with a single election day for political elections, thus reducing the cost associated with voting. This constitutional reform increased voter turnout in local elections in Sweden. The overall conclusion of this paper is that higher voter turnout yields higher municipal taxes and larger local public expenditures. Second,there is some evidence that higher turnout decreases the vote share for right-wing parties.
    Keywords: Voter Turnout; Size of government; Sweden; Finland; Local public finance; Instrumental variable regression
    JEL: D70 D72 H39
    Date: 2013–11–04
  3. By: Bethencourt, Carlos; Kunze, Lars
    Abstract: A benchmark result in the political economy of taxation is that the degree of redistribution is positively linked to income inequality. However, empirical evidence supporting such a relationship turns out to be mixed. This paper shows how these different empirical reactions can be rationalized within a simple model of tax avoidance and costly tax enforcement. By focussing on structure induced equilibria in which taxpayers vote over the size of the income tax and the level of tax enforcement, we show that higher inequality may well decrease the extent of redistribution, depending on two opposing effects: the standard political effect and a negative tax base effect working through increases in the average level of tax avoidance and the share of enforcement expenditures in total tax revenue.
    Keywords: Tax avoidance, Voting, Redistribution
    JEL: D72 H26 H31
    Date: 2013–10–31
  4. By: Ghani, Ejaz; Mani, Anandi; O'Connell, Stephen D.
    Abstract: This study examines whether political empowerment of women affects their economic participation. In the context of mandated political representation reform for women in India, the study finds that the length of exposure to women politicians affects overall female labor force participation. These effects seem to arise through direct and indirect channels: political representation of women directly affects hours of work assigned to women under the recent national public works program, the Mahatma Gandhi National Rural Employment Guarantee Scheme. In addition, the level of access to public goods, as influenced by exposure to women leaders over time, increases the likelihood of women being engaged in the labor force. The findings suggest that women's participation in politics could be a useful policy tool to increase both the supply of and the demand for labor market opportunities for women, potentially helping to stem India's declining female labor force participation rate.
    Keywords: Population Policies,Gender and Development,Labor Markets,Gender and Law,Gender and Health
    Date: 2013–10–01
  5. By: Matias Iaryczower; Santiago Oliveros
    Abstract: We consider a model of decentralized bargaining among three parties. Parties meet one-on-one after being randomly matched, and can sell or buy votes to one another. The party with a majority of the votes can decide to implement its preferred policy or extend negotiations to capture additional rents. We provide necessary and suffcient conditions for the existence of an equilibrium in which a party acts as an intermediary, transferring resources and voting rights among parties that wouldn't negotiate directly with one another. These conditions are generic, do not require special frictions, and include `well-behaved' (i.e., single-peaked) preference profiles.
    Date: 2013–01–19
  6. By: Grigoriadis, Theocharis
    Abstract: In this paper, I argue that religion matters for the emergence of democracies and dictatorships. Religion is defined as a stochastically set demand for public goods. Different types of religious collectives reflect different tradeoffs between centralized resource distribution and market rewards. Religions are defined as collectivist, when their respective collectives facilitate the hierarchical provision of common pool resources toward their members at the expense of market incentives. Religions are defined as individualist, when their respective collectives recruit and preserve their members on the basis of market incentives. Islam, Orthodoxy and Catholicism are treated as collectivist religions, whereas Judaism and Protestantism as individualist ones. I provide a historical overview that designates the Jewish kibbutz as the collective of democracy and the Russian-Orthodox monastery as the collective of dictatorship. Assuming a collectivist economy, I solve the radical government and modernization stochastic games. I find that modernization occurs in a collectivist economy when the threat of a radical government is imminent and when the leader has high extraction rents over the economy. In order to stay in power, the leader credibly commits to provide more public goods in the future, and thus modernization occurs. Underdevelopment occurs at intermediate levels of state enforcement, modernization at low levels and centralization at high levels of state enforcement. The emergence of a radical government is more likely in a collectivist rather than in an individualist economy. --
    Keywords: democracy,dictatorship,collectivism,individualism,modernization,Orthodoxy,Judaism
    JEL: D72 D73 D78 P21 P26 P32 P51 Z12
    Date: 2013
  7. By: Steven Callander; Bård Harstad
    Abstract: We present a model where heterogeneous districts choose both whether to experiment and the policies to experiment with. Since districts learn from each other, the first-best requires that policy experiments converge so that innovations are useful also for neighbors. However, the equilibrium implies the reverse – policy divergence – since each district uses its policy choice to discourage free-riding. We then study a clumsy central government that harmonizes final policy choices. This progressive concentration of power induces a policy tournament that can increase the incentive to experiment and encourage policy convergence. We derive the best political regime as well as the optimal levels of heterogeneity, transparency, prizes, and intellectual property rights.
    JEL: D78 H77
    Date: 2013–10
  8. By: Marina Azzimonti
    Abstract: American politics have become increasingly polarized in recent decades. To the extent that political polarization introduces uncertainty about economic policy, this pattern may have adversely affected the economy. According to existing theories, a rise in the volatility of fiscal shocks faced by individuals should result in a decline in economic activity. Moreover, if polarization is high around election dates, businesses and households may be induced to delay decisions that involve high reversibility costs (such as investment or hiring under search costs). Testing these theories has been challenging given the low frequency at which existing polarization measures have been computed (in most studies, the series is available only biannually). In this paper, I provide a novel high-frequency measure of polarization, the political polarization index (PPI). The measure is constructed monthly for the period 1981-2013 using a search-based approach. I document that while the PPI fluctuates around a constant mean for most of the sample period prior to 2007, it has exhibited a steep increasing trend since the Great Recession. Evaluating the effects of this increase using a simple VAR, I find that an innovation to polarization significantly discourages investment, output, and employment. Moreover, these declines are persistent, which may help explain the slow recovery observed since the 2007 recession ended.
    Keywords: Economic policy ; Uncertainty ; Business cycles
    Date: 2013

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.