nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒03‒01
twenty-two papers chosen by
Eugene Beaulieu
University of Calgary

  1. Does Japan have a Gray Democracy? An empirical analysis of prefectural data By Shimasawa, Manabu; Oguro, Kazumasa; Toyoda, Nao
  2. The Effect of Labor Migration on the Diffusion of Democracy: Evidence from a Former Soviet Republic By Mahmoud, Toman Omar; Rapoport, Hillel; Steinmayr, Andreas; Trebesch, Christoph
  3. Flip-Flopping: Ideological Adjustment Costs in the United States Senate. By Jason M. DeBacker
  4. Do return migrants transfer political norms to their origin country? Evidence from Mali By Mercier, Marion; Chauvet, Lisa
  5. On the Political Economy of Public Safety Investments By Tim Friehe; Eric Langlais
  6. Soft budget constraints in a federation: the effect of regional affiliation By Willem SAS
  7. Electoral accountability and local government spending in Indonesia By Skoufias, Emmanuel; Narayan, Ambar; Dasgupta, Basab; Kaiser, Kai
  8. Accountability in Autocracies: The Role of Revolution Threat By Li, Yuan; Gilli, Mario
  9. Trans-nationalising Europe’s Voting Space By Garzia Joseph Lacey; Alexander H. Trechsel
  10. The Effect of Economic Change and Elite Framing on Economic Preferences: A Survey Experiment By Marx, Paul; Schumacher, Gijs
  11. Politicizing Europe: The Challenge of Executive Discretion By Jonathan White
  12. Candidate Ballot Information and Election Outcomes: The Czech Case By Stepan Jurajda; Daniel Munich
  13. Democratic values transmission By Pablo Branas-Garza; Maria Paz Espinosa; Ayca Ebru Giritligil
  14. Anatomy of grand corruption: A composite corruption risk index based on objective data By Mihaly Fazekas; Istvan Janos Toth; Lawrence Peter King
  15. Comparing Generalized Median Voter Schemes According to their Manipulability By R. Pablo Arribillaga; Jordi Massó
  16. The agricultural invasion and the political economy of agricultural trade policy in Belgium, 1875-1900 By Maarten VAN DIJCK; Tom TRUYTS
  17. Coalition Politics and Reform Dynamics in Thailand By Veerayooth Kanchoochat
  18. Globalization and the Transmission of Social Values: The Case of Tolerance By Berggren, Niclas; Nilsson, Therese
  19. Union Organizing Decisions in a Deteriorating Environment: The Composition of Representation Elections and the Decline in Turnout By Henry S. Farber
  20. Who cares about the democratic mandate of education? A text analysis of the Swedish secondary education reform of 2009 By Adman, Per
  21. Household Sorting and Politics: Empirical Evidence for the Metropolitan Area of Porto (Portugal) By José da Silva Costa; Ruben Fernandes; Ana Natálio
  22. A Theory of Trade Policy Under Dictatorship and Democratization By Ben Zissimos

  1. By: Shimasawa, Manabu; Oguro, Kazumasa; Toyoda, Nao
    Abstract: This study examines whether or not aging is increasing the political influence wielded by Japan’s elderly and promoting a so-called “gray democracy.” Using a median voter model based on data from Japan’s 47 prefectures during the period from 2000 to 2010, we examined the relationship between aging and geriatric expenditures. As a result, controlling income, expenditures, economic conditions, and political factors, we found that geriatric welfare expenditures increase along with median age. The findings utilizing this median voter model imply that the aging median voter may be able to gain substantial benefit through voting. If this prefectural-level relationship between aging and increasing geriatric expenses is reflected on a national level, one may conclude that Japan’s continued aging will likely strengthen the political influence of the elderly with respect to increased social security benefits.
    Keywords: aging, political aging, panel data, political economy, median voter model
    JEL: C23 H55 J18
    Date: 2014–02
  2. By: Mahmoud, Toman Omar (Kiel Institute for the World Economy); Rapoport, Hillel (Paris School of Economics); Steinmayr, Andreas (University of St. Gallen); Trebesch, Christoph (University of Munich)
    Abstract: Migration contributes to the circulation of goods, knowledge, and ideas. Using community and individual-level data from Moldova, we show that the emigration wave that started in the late 1990s strongly affected electoral outcomes and political preferences in Moldova during the following decade and was eventually instrumental in bringing down the last ruling Communist government in Europe. Our results are suggestive of information transmission and cultural diffusion channels. Identification relies on the quasi-experimental context studied and on the differential effects arising from the fact that emigration was directed both to more democratic Western Europe and to less democratic Russia.
    Keywords: emigration, political institutions, elections, social networks, information transmission, cultural diffusion
    JEL: F22 D72 O1
    Date: 2014–02
  3. By: Jason M. DeBacker
    Abstract: Using a long panel of roll call voting data, I find that “flip-flopping" senators face significant electoral costs when changing positions. In models of electoral competition, as the costs to candidates changing position approach zero, the equilibrium prediction is the convergence of platforms. Such convergence is at odds with empirical observation. Using a dynamic, structural model of candidate positioning, I identify the nature of the costs associated with changing position that may result in such non-convergence.
    Keywords: Ideology, Voting, Politics
    JEL: D72 C61
    Date: 2014–01
  4. By: Mercier, Marion; Chauvet, Lisa
    Abstract: This paper explores the link between return migration and political outcomes in the origin country, using the case study of Mali. We use electoral and census data at the locality level to investigate the role of return migration on participation rates and electoral competitiveness. First, we run OLS and IV estimations for the 2009 municipal election, controlling for current emigration and using historical and distance variables as instruments for return migration and current emigration. Second, we build a panel dataset combining the 1998 and 2009 censuses and the electoral results for the municipal ballots of those two years to control for the potential time-invariant unobservable characteristics of the localities. We find a positive impact of the stock of return migrants on participation rates and on electoral competitiveness, which mainly stems from returnees from non-African countries. Finally, we show that the impact of returnees on turnout goes beyond their own participation, and that they affect more electoral outcomes in areas where non-migrants are poorly educated, which we interpret as evidence of a diffusion of political norms from returnees to non-migrants.
    Keywords: Return migration; Elections; Mali; Norms transfer;
    JEL: D72 F22 O15 O55
    Date: 2014
  5. By: Tim Friehe; Eric Langlais
    Abstract: This paper explores the interaction of private precaution and public safety investments when the latter are determined in a political process. We distinguish the scenarios in which the median victim infuences public safety from the one in which the injurer lobbies the public agent, and analyze both negligence and strict liability with a defense of contributory negligence. We establish that the levels of injurer and victim care are always socially optimal for the equilibrium level of public safety. However, the equilibrium level of public safety differs from its first-best level and drastically depends on both the specifi…cs of the political process and the liability rule applied. This entails that the level of social costs is critically determined by the choice between liability rules for a given political process.
    Keywords: liability law, care levels, public safety, political economy, median voter,firm lobbying
    JEL: K D
    Date: 2014
  6. By: Willem SAS
    Abstract: This paper revisits the soft budget constraint problem, pushing sub-central (state) borrowing to the limit in multi-tiered countries. Accounting for the institutional design and political practice common to many federations, bargaining and log-rolling are introduced to the analysis. In our intertemporal model, a federal legislature of regionally elected representatives bargains on federal grants going to the states. As a result, voters will elect federal candidates in favour of looser state public spending than otherwise expected. This strategic voting not only leads to overly generous bailout policies. Also, and compared to a setting where federal decision making does not follow from bargaining and regional affiliation, states over-borrow more inefficiently. Allowing for heterogeneity in state income and population does not affect this inefficient outcome. Lower relative per capita incomes even boost federal generosity and subsequent over-borrowing by the states.
    Date: 2014–02
  7. By: Skoufias, Emmanuel; Narayan, Ambar; Dasgupta, Basab; Kaiser, Kai
    Abstract: This paper takes advantage of the exogenous phasing of direct elections in districts and applies the double-difference estimator to measure impacts on (i) human development outcomes and (ii) the pattern of public spending and revenue generation at the district level. The analysis reveals that four years after the switch to direct elections, there have been no significant effects on human development outcomes. However, the estimates of the impact of Pilkada on health expenditures at the district level suggest that directly elected district officials may have become more responsive to local needs at least in the area of health. The composition of district expenditures changes considerably during the year and sometimes the year before the elections, shifting toward expenditure categories that allow incumbent district heads running as candidates in the direct elections to"buy"voter support. Electoral reforms did not lead to higher revenue generation from own sources and had no effect on the budget surplus of districts with directly elected heads.
    Keywords: Subnational Economic Development,Parliamentary Government,E-Government,Public Sector Expenditure Policy,Debt Markets
    Date: 2014–02–01
  8. By: Li, Yuan (Stockholm China Economic Research Institute); Gilli, Mario (University of Milan-Bicocca)
    Abstract: The purpose of this paper is to explore the joint work of two mechanisms that might constrain autocratic rulers: the threat of a coup by the political elite and of a revolution by the citizens. Our results will help explain a well-established and crucial fact, that is, that autocracies are far more likely than democracies to be either the best or the worst performers in terms of growth and of public goods policies. To this aim, we focus on accountability within dictatorships using a common agency model where the political elite and the citizens are the principals and the autocrat is the agent. Our results highlight that both excessively strong and excessively weak dictators lead to poor economic performances, while a balanced distribution of de facto political power is required to incentivize the ruler to choose congruent economic policies.
    Keywords: autocracy; accountability; coup; revolt
    JEL: D02 D74 H11
    Date: 2014–02–17
  9. By: Garzia Joseph Lacey; Alexander H. Trechsel
    Abstract: Building on MEP Andrew Duff’s proposal to create a limited pan-European constituency for electing representatives to the European Parliament, this paper argues that there are good reasons for believing that such an institution would better be built around national parties rather than Europarties as they currently exist. Using data from a Voting Advice Application (VAA), the EU Profiler, we demonstrate that the overwhelming majority of individuals who used this device would be better represented in the European Parliament, in terms of their policy preferences, if they could vote for a party from a different member state than their own. Furthermore, we find that there is significant active demand to be able to vote in this manner, and that such demand is positively correlated with citizens who found that they would be better represented given the opportunity to vote transnationally. Ultimately, we argue that a transnational electoral constituency administered by a VAA that could match individuals with the closest partisan offer in Europe would not only improve the level of representation in the EP but also contribute to forging deeper transnational links in the EU.
    Date: 2014–01–27
  10. By: Marx, Paul (University of Southern Denmark); Schumacher, Gijs (University of Southern Denmark)
    Abstract: An unresolved question in political science is how economic downturns affect citizens' economic left-right preferences. Existing observational studies fail to isolate the effect of economic conditions and the effect of elite framing of these conditions. We therefore designed a survey experiment to evaluate how economic change in conjunction with different elite frames impact on citizens' preferences for economic policies. We hypothesise and demonstrate that the effects of these frames differ by income group and partisanship. Our survey experiment – carried out in the UK – demonstrates that poor economic prospects motivate support for unemployment benefits vis-à-vis deficit reduction. Emphasis on government debt and deficits increases support for the latter policy option. Also, we find support for the hypothesis that partisans are less responsive to the economy than independents.
    Keywords: economic preferences, economic crises, elite framing, survey experiment, UK
    JEL: D72 Z18
    Date: 2014–02
  11. By: Jonathan White
    Abstract: Political decision-making in the Euro-crisis has relied heavily on executive discretion, exercised at speed and rationalised with reference to the pressing demands of emergency. This paper explores the challenges raised for political opposition, notably challenges of a temporal kind. With its deviations from policy and procedural norms, discretionary politics tends towards a politics without rhythm, leading to major asymmetries between decision-makers and voices of opposition. These centre on issues of timing and the ability to identify authorship and content of decisions. Such asymmetries arguably correspond to an underlying one between the temporality of political decision-making and of contemporary finance capitalism, with agents of the former increasingly inclined to pursue ‘fast policy’ as a means to keep pace. A democratic response is likely to involve strengthening and synchronising the rhythms of parliamentary politics, as well as being receptive to forms of opposition less reliant on the rhythms that discretion subverts.
    Keywords: politicization, democracy, time, executive power, European Union
    Date: 2014–02
  12. By: Stepan Jurajda; Daniel Munich
    Abstract: We measure the importance of candidate characteristics listed on ballots for a candidate's position on a slate, for preferential votes received by a candidate, and, ultimately, for getting elected. We focus on the effects of gender, various types of academic titles, and also several novel properties of candidatesínames. Using data on over 200 thousand candidates competing in recent Czech municipal board and regional legislature elections, and conditioning on slate Öxed effects, we find ballot cues to play a stronger role in small municipalities than in large cities and regions, despite the general agreement on higher candidate salience in small municipalities. We also quantify the election advantage of a slate being randomly listed first on a ballot.
    Keywords: low-information elections; ballot order effects; name properties;
    JEL: D72 D83
    Date: 2014–01
  13. By: Pablo Branas-Garza (Business School, Middlesex University London); Maria Paz Espinosa (Departamento de Fundamentos Analisis Economico II,University of the Basque Country; BRiDGE,University of the Basque Country); Ayca Ebru Giritligil (BELIS, Istanbul Bilgi University)
    Abstract: This study addresses the issue of intergenerational transmission of democratic values embedded in social choice rules. We focus on a few rules which have been the focus of social choice theory: plurality, plural- ity with a runoff, majoritarian compromise, social compromise and Borda rule. We confront subjects with preferences profiles of a hypothetical electorate over a set of four alternatives. Different rules produce different outcomes and subjects decide which alternative should be chosen for the society whose preference profile is shown. We elicit each subject’s pref- erences over rules and his/her parents’ and check whether there is any relationship; 186 students and their parents attended the sessions at Is- tanbul Bilgi University. Overall, we find support for the hypothesis of parental transmission of democratic values and gender differences in the transmitted rule.
    Date: 2014–01
  14. By: Mihaly Fazekas (University of Cambridge Faculty of Politics, Psychology, Sociology); Istvan Janos Toth (Centre for Economic and Regional Studies Hungarian Academy of Sciences); Lawrence Peter King (Department of Sociology University of Cambridge)
    Abstract: Although both the academic and policy communities have attached great importance to measuring corruption, most of the currently available measures are biased and too broad to test theory or guide policy. This article proposes a new composite indicator of grand corruption based on a wide range of elementary indicators. These indicators are derived from a rich qualitative evidence on public procurement corruption and a statistical analysis of a public procurement data in Hungary. The composite indicator is constructed by linking public procurement process 'red flags' to restrictions of market access. This method utilizes administrative data that is available in practically every developed country and avoids the pitfalls both of perception based indicators and previous 'objective' measures of corruption. It creates an estimation of institutionalised grand corruption that is consistent over time and across countries. The composite indicator is validated using company profitability and political connections data.
    Keywords: public procurement, grand corruption, corruption technique, composite corruption risk index
    JEL: D72 D73 H57
    Date: 2014–01
  15. By: R. Pablo Arribillaga; Jordi Massó
    Abstract: We propose a simple criterion to compare generalized median voter schemes according to their manipulability. We identify three nec- essary and sufficient conditions for the comparability of two generalized median voter schemes in terms of their vulnerability to manipulation. The three conditions are stated using the two associated families of monotonic fixed ballots and depend very much on the power each agent has to unilat- erally change the outcomes of the two generalized median voter schemes. We perform a specific analysis of all median voter schemes, the anonymous subfamily of generalized median voter schemes.
    Keywords: : Generalized Median Voting Schemes; Strategy-proofness; Anonymity.
    JEL: C78 D78
    Date: 2014–02–17
  16. By: Maarten VAN DIJCK; Tom TRUYTS
    Abstract: After 1875, cheap grain from the United States and Russia flooded the European markets. Many countries like Germany, France, and Sweden turned to agricultural trade protection, while others, like the UK and Denmark, held on to a free trade position. Belgium adopted a middle position, leaving its grain markets open but protecting animal husbandry, dairy production, and the processing of foodstuffs. The econometric analysis of the votes of Belgian Members of Parliament on four proposals to install protectionist measures on agricultural trade seeks to identify which economic or political interests explain the Belgian policy option.
    Date: 2014–01
  17. By: Veerayooth Kanchoochat (National Graduate Institute for Policy Studies)
    Abstract: This article provides an explanation for Thailand’s long-term policymaking patterns from 1980 to 2011, with particular reference to macroeconomic and industrial policies. It develops a typology of reform orientations in Thailand, conditioned by government type (strong or fragmented) and ruling-coalition type (unelected or elected elites). When under strong leadership, reform was substantively implemented; its orientation was forged into fiscal tightening and “exclusive industrial policy” when ruled by unelected elites (Prem, Anand, and Surayud), but into an expansionary budget and “inclusive industrial policy” when ruled by elected elites (Chatichai and Thaksin). In contrast, when under multi-party governments, political leaders were less capable of pursuing meaningful reform and ended up with either internationally dominant discourses (Chuan and Abhisit) or pork-barrel projects (Banharn and Chavalit). It is further argued that government type hinges upon constitutional design while the two-elite struggle has resulted from the political turmoil of the prior decade. The assessment of reform outcomes requires a rethinking of the relationship between inflation, macroeconomic stability, and growth; and of institutional prerequisites for industrial policymaking. Policy suggestions entail constitutional redesign and the redressing of macroeconomic and industrial balance.
    Date: 2014–02
  18. By: Berggren, Niclas (Research Institute of Industrial Economics (IFN)); Nilsson, Therese (Lun)
    Abstract: Tolerance – respecting those who are different – is arguably of particular importance in an era of globalization, where a potential for economic, social and personal development is increasingly a function of interaction with others different from oneself. We investigate whether globalization induces parents to want to instill tolerance in their children, the main idea being that this would equip the latter for greater success in a more integrated world. We indeed find, using a willingness-to-teach-kids-tolerance measure, that globalization enhances the willingness to transmit such social values. More precisely, economic and social, but not political, globalization has this effect, as shown by using the KOF Index of Globalization in cross-sectional and panel-data regression analyses of up to 66 countries. Addressing potential endogeneity concerns using an instrumental variables approach moreover suggests these relationships to be causal. Overall, our results confirm that certain kinds of globalization seem able to shape values in ways considered desirable by many.
    Keywords: Globalization; Tolerance; Social values; Children; Welfare state
    JEL: F01 F10 P45 Z13
    Date: 2014–02–18
  19. By: Henry S. Farber
    Abstract: It is well known that the organizing environment for labor unions in the U.S. has deteriorated dramatically over a long period of time, contributing to the sharp decline in the private sector union membership rate and resulting in many fewer representation elections being held. What is less well known is that, since the late 1990s, average turnout in the representation elections that are held has dropped substantially. These facts are related. I develop a model of union decision making regarding selection of targets for organizing through the NLRB election process with the clear implication that a deteriorating organizing environment will lead to systematic change in the composition of elections held. The model implies that a deteriorating environment will lead unions not only to contest fewer elections but also to focus on larger potential bargaining units and on elections where they have a larger probability of winning. A standard rational-voter model implies that these changes in composition will lead to lower turnout. I investigate the implications of these models empirically using data on turnout in over 140,000 NLRB certification elections held between 1973 and 2009. The results are consistent with the model and suggest that changes in composition account for about one-fifth of the decline in turnout between 1999 and 2009.
    JEL: J5 J50
    Date: 2014–02
  20. By: Adman, Per (The Department of Government, Uppsala University)
    Abstract: For several decades after WWII, Swedish education reforms were justified extensively based on democratic and equality arguments. The Social Democrats, the party in governing power during this era, considered a uniform education system crucial to their endeavors towards a greater democracy and greater equality. According to current research, arguments of this kind are being used increasingly rarely to justify general reforms to public primary and secondary education. It is however unknown whether this is also true for the leftist/green opposition parties and not only the current center-right governing parties. The subject of this study is parliamentary debate and the text of the government bill concerning the latest key upper-secondary school reform of 2009, which entailed greater differentiation between students. Consequently, strong criticism from the leftist opposition from the democratic and equality perspectives was to be expected. On the contrary, this study shows that the opposition – like the center-right government – used democratic and equality arguments only to a minor extent. The results are consistent with fears, expressed with regard to Sweden and globally, that the democratic mandate is being ignored in the design of education systems for the future.
    Keywords: Education reforms; Sweden upper-secondary education; democratic arguments; equality arguments
    JEL: H75 I28
    Date: 2014–02–18
  21. By: José da Silva Costa (School of Economics and Management, University of Porto.); Ruben Fernandes (CITTA - School of Engineering, University of Porto); Ana Natálio (CEAUP, University of Porto)
    Abstract: Sorting and heterogeneity of households at metropolitan level has been a subject of many empirical studies. Interest in the subject goes beyond the knowledge of household mobility because it also has importance for the debate on the Tiebout’s hypothesis that households “vote with the feet” by choosing the best bundle of local public goods and local taxes. A result of households “voting with the feet” is a more heterogeneous public provision of local public goods by municipalities and, at the same time, a smaller distance between household preferences and public provision of local public goods. Household movements are determined not only by the bundle of public goods-local taxes in each jurisdiction but also by restrictions to mobility such as real estate market and availability of jobs. Several authors argue that aggregate empirical studies are not sufficient to test empirically the Tiebout’s hypothesis because sorting and heterogeneity may be a consequence of those restrictions. So they defend instead the implementation of micro studies where we observe the motivations of household movements. In our study we analyze sorting and heterogeneity using an aggregated approach, but we provide empirical evidence for two different periods: a first period in which there is no role for local politics in the sorting and heterogeneity process; a second period where there is an increasing role of local politics on the decision of households to locate. The empirical evidence on sorting and heterogeneity in those two periods gives us a hint about the importance of local politics on household decisions to locate in a metropolitan area, and therefore provides empirical evidence on the importance of the Tiebout’s hypothesis compared with other determinants of household mobility. The empirical study is conducted for the Metropolitan Area of Porto for a long period in order to include non-elected local governments and elected local governments. The empirical evidence we gather covers a wide period that goes from 1920 till 2011 using census data.
    Keywords: Household mobility; Sorting; Tiebout´s hypothesis; Local Governments; Portugal.
    JEL: J11 H41 H73 R23
    Date: 2014–02
  22. By: Ben Zissimos (Department of Economics, University of Exeter)
    Abstract: This paper develops a new model of trade policy under dictatorship and democratization. The paper makes two contributions. One is to provide a deeper understanding of the relationship between political institutions and economic performance by studying the endogenous interaction between the form of government and trade policy. If a ruling elite own a factor that is scarce then democratization goes hand in hand with trade liberalization and an increase in economic efficiency, as argued by classical scholars. But if the elite own an abundant factor then democratization is accompanied by an increase in protectionism and a reduction in e¢ ciency. The paper also characterizes the circumstances under which a dictatorship can use trade policy to forestall democratization. The paper?s second contribution is to show how trade policy can be manipulated to maintain the status quo in the face of world price shocks, thus opening the door to a re-examination of trade policy responses to technology shocks. The model is used to explain an interesting episode of trade policymaking between 1815 and 1846, during which time Britain substantially liberalized trade while Prussia, on the other side of the grain market, signi?cantly increased protectionism. It is also used to shed light on the wide-spread imposition of export restrictions in response to the 2007-08 food crisis.
    Keywords: Efficiency, institutions, protectionism, social con?ict, trade policy.
    JEL: D30 D74 F11 F13 P14
    Date: 2014

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