nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒05‒04
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Full transparency of politicians' actions does not increase the quality of political representation By David Stadelmann; Marco Portmann; Reiner Eichenberger
  2. Coalition-Preclusion Contracts and Moderate Policies By Hans Gersbach; Oriol Tejada; Maik T. Schneider
  3. Swing States, The Winner-Take-All Electoral College, and Fiscal Federalism By Duquette, Christopher; Mixon, Franklin; Cebula, Richard
  4. Voters’ responsiveness to public employment policies By Marta Curto-Grau
  5. The Power of Religious Organizations in Human Decision Processes: Analyzing Voting Behavior By Benno Torgler; David Stadelmann; Marco Portmann
  6. Ideological Dissent in Downsian Politics By Siddhartha Bandyopadhyay; Manaswini Bhalla; Kalysan Chatterjee; Jaideep Roy
  7. God Does Not Play Dice, But People Should: Random Selection in Politics, Science and Society By Bruno S. Frey; Lasse Steiner
  8. Regime Change, Democracy, and Growth By Caroline Freund; Mélise Jaud
  9. The Political Economy of Labor Market Regulation with R&D By Palokangas, Tapio K.
  10. Dictators Walking the Mogadishu Line: How Men Become Monsters and Monsters Become Men By Tim Willems; Shaun Larcom; Mare Sarr
  11. Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method By Campos, Nauro F; Coricelli, Fabrizio; Moretti, Luigi
  12. State Ownership and Corruption By Billon, Steve; Gillanders, Robert
  13. Gender differences in shirking: monitoring or social preferences? Evidence from a field experiment By Johansson, Per; Karimi, Arizo; Nilsson, Peter

  1. By: David Stadelmann; Marco Portmann; Reiner Eichenberger
    Abstract: We identify the impact of transparency in political decision -making on the quality of political representation with a difference- in-difference strategy. The quality of political representation is measured by observed divergence of parliamentary decisions from revealed voter preferences on the very same issues. Full transparency of votes of individual politicians does not decrease divergence from voter preferences.
    Keywords: Transparency; quality of political decisions; representation; parliament; individual votes; referenda
    JEL: D70 D80 H11
    Date: 2013–09
  2. By: Hans Gersbach (ETH Zurich, Switzerland); Oriol Tejada (ETH Zurich, Switzerland); Maik T. Schneider (ETH Zurich, Switzerland)
    Abstract: We examine the effects of a novel political institution, which we call Coalition- Preclusion Contracts, on elections, policies, and welfare. Coalition-Preclusion Contracts enable political parties to credibly commit before the elections not to form a coalition after the elections with one or several other parties specified in the contract. We consider a political game in which three parties compete to form the government and study when contracts of the above type will be written. We find that in most circumstances Coalition-Preclusion Contracts with a single-party exclusion rule defend the interests of the majority by moderating the policies implemented. Moreover, they yield welfare gains for a large set of parameter values. We discuss the robustness of the results in more general settings and study how party-exclusion rules have to be adjusted when more than three parties compete in an election.
    Keywords: coalition formation; political contracts; elections; government formation
    JEL: D72 D82 H55
    Date: 2014–04
  3. By: Duquette, Christopher; Mixon, Franklin; Cebula, Richard
    Abstract: There is a debate regarding the impact of swing or independent voters in American politics. While some argue that swing voters either do not swing or have a marginal impact on campaigns, the decline in voter partisan identification and the rise of independents means that they have a potential impact on elections, making them a desirable commodity to candidates. Additionally, presidential elections represent a unique case for swing voters. A robust literature notes that during the presidential primary and caucus process, voters in states such as Iowa or New Hampshire effectively have a greater voice in the election than those in other states. This is due to the number of voters in these states, and the strategic importance of having their primaries and caucuses positioned at the beginning of the presidential selection process. Additionally, the Electoral College is criticized as giving disproportionate influence to some voters or states, or as otherwise distorting the results in presidential elections because of its winner-take-all method of allocating votes in 48 or the 50 states. But these assertions notwithstanding, can the impact or distortion that swing-voters have in some states compared to others, in terms of their relative influence on presidential elections, be quantified? Relatedly, does the Electoral College distort the impact of swing voters? This study presents a new method to assess the impact of swing voters within the winner-take-all method that states use to allocate electoral votes. By looking at several recent U.S. presidential elections, we quantify how the winner-take-all method of allocating electoral votes produces disparities in the voting power of citizens across states.
    Keywords: Electoral College; voting power
    JEL: D12 D72 D78 K00
    Date: 2013–02–09
  4. By: Marta Curto-Grau (University of Heidelberg)
    Abstract: This paper examines whether the distribution of public employment affects the electoral support for the incumbent government that allocates jobs. To do this we focus on the Spanish Plan for Rural Employment (PER), a program of temporary public employment introduced by the central government in two lagging regions. We evaluate voters’ responsiveness to this policy using municipal-level electoral data and employing an estimator that combines propensity score matching with a difference-indifferences strategy (Heckman et al., Econometrica 65 (1998) 2). We show that the average treatment effect on the treated is a 2 percentage-point increase of the vote share for the ruling party at general elections and we also find evidence of an increase in electoral participation.
    Keywords: Public employment, electoral rewards, difference-in-differences, propensity score matching
    JEL: H53 P16
    Date: 2014
  5. By: Benno Torgler; David Stadelmann; Marco Portmann
    Abstract: In Switzerland, two key church institutions - the Conference of Swiss Bishops (CSB) and the Federation of Protestant Churches (FPC) - make public recommendations on how to vote for certain referenda. We leverage this unique situation to directly measure religious organizations' power to shape human decision making. We employ an objective measure of voters' commitment to their religious organization to determine whether they are more likely to vote in line with this organization's recommendations. We find that voting recommendations do indeed matter, implying that even in a secularized world, religion plays a crucial role in voting decisions.
    Keywords: Power; religion; voting; referenda; trust; rules of thumb
    JEL: D03 D72 D83 H70
    Date: 2013–11
  6. By: Siddhartha Bandyopadhyay; Manaswini Bhalla; Kalysan Chatterjee; Jaideep Roy
    Abstract: We analyze the Hotelling-Downs model of a winner-take-all elections with sequential entry where n > 2 'office-seeking' candidates with privately known qualities arrive in an order to announce platform commitments and voters receive partially informative exogenous signals about quality of each contestant. We characterize two-party equilibria when the order of entry is exogenously given. In these equilibria, entry can occur in any 'round' with positive probability: high quality candidates signal their type through showing ideological dissent with the voters while low quality ones randomize between (mis)-signaling quality through dissent and staying out. An interesting implication of this is that while the presence of a partially informative press can keep low quality candidates out of competition up to a certain degree, electoral competition improves voter's information about candidate types beyond what the press can reveal. However this endogenous mechanism of strategic information transmission leads to a political polarization. We then endogenize the order of entry to show that in general some high quality candidates enter early and others enter late while all low quality candidates either stay out or enter late. Moreover, while extremism continues to signal quality, there must be a gradual moderation in ideology although information revelation is non-monotonic in time with full revelation for early and late entrants and only partial revelation for intermediate entrants.
    Keywords: Sequential entry, Unobserved quality, Stratetic dissent, Polarization, Endogenous Order
    JEL: C72 D72 D82
    Date: 2014–04
  7. By: Bruno S. Frey; Lasse Steiner
    Abstract: This paper discusses and proposes random selection as a component in decision-making in society. Random procedures have played a significant role in history, especially in classical Greece and the medieval city-states of Italy. We examine the important positive features of decisions by random mechanisms. Random processes allow representativeness with respect to individuals and groups. They significantly reduce opportunities to influence political decisions by means of bribery and corruption and decrease the large expenses associated with today’s democratic election campaigns. Random mechanisms can be applied fruitfully to a wide range of fields, including politics, the judiciary, the economy, science and the cultural sector. However, it is important that random selection processes are embedded in appropriately designed institutions.
    Keywords: Random selection; lot; democracy; representativeness; corruption
    Date: 2014–03
  8. By: Caroline Freund (Peterson Institute for International Economics); Mélise Jaud (World Bank)
    Abstract: The empirical literature on the relationship between democracy and growth has yielded conflicting results. Cross-country studies have failed to identify a significant impact of democracy on growth, while within-country studies have found a strong positive effect of the transition to democracy on growth. We reconcile the conflicting evidence by showing that the positive effect of democratic transitions results from regime change as opposed to democratization. We identify over 100 transitions in the last half-century with various outcomes: to and from democracy, some partial, and some failed. The variety of experiences allows us to compare the growth outcome of democratic transitions with that of other transitions rather than with a no-transition counterfactual. Conditioning on regime change filters out selection effects and shows that transition to democracy yields no growth dividend compared to other types of regime change. We also show that countries that democratize slowly do not gain from regime change. These results suggest that the growth dividend from political transition results from swift regime change rather than from democratization.
    Keywords: political transition, autocracy, event study
    JEL: N40 O43
    Date: 2014–04
  9. By: Palokangas, Tapio K. (University of Helsinki)
    Abstract: In this paper, I study the political rationale for labor market regulation. Oligopolists employ raw labor and human capital (i.e. key workers) for production and R&D. There are many jurisdictions, in each of which a self-interested policy maker can regulate/deregulate the local labor market. I show that the observed tendency to labor market deregulation results from labor market policies being set up at the local level. In small jurisdictions, the fall of income due to wage increases is so large that the labor markets are deregulated. With labor market integration, jurisdictions get larger and face less competition from outside. Then, the fall of income due to wage increases is reduced and labor market regulation becomes more attractive to workers' lobbies.
    Keywords: political economy, labour market regulation, R&D, union power
    JEL: F15 J50 O40
    Date: 2014–04
  10. By: Tim Willems; Shaun Larcom; Mare Sarr
    Abstract: History offers many examples of dictators who worsened their behavior significantly over time (like Zimbabwe's Robert Mugabe), while there are also cases of dictators who have displayed remarkable improvements (like Jerry Rawlings of Ghana).� We show that such mutations can result from rational behavior when the dictator's flow use of repression is complementary to his accumulated stock of wrongdoings.� This complementarity gives rise to two steady states (one where repression is low and one where repression is high) and implies that any individual rising to power in this setup has the potential to end up as either a moderate leader, or as a dreaded tyrant.� Our model shows that dictators are more likely to derail with higher levels of divertible funds available, for example stemming from fungible aid inflows or from the exploitation of natural resources.
    Keywords: Dictatorship, Repression, Political violence, Resource curse, Learning, Multiple steady states
    JEL: D72 D74 N47 O10
    Date: 2014–04–28
  11. By: Campos, Nauro F (Brunel University); Coricelli, Fabrizio (Paris School of Economics); Moretti, Luigi (University of Padova)
    Abstract: This paper presents new estimates of the economic benefits from economic and political integration. Using the synthetic counterfactuals method, we estimate how GDP per capita and labour productivity would have behaved for the countries that joined the European Union (EU) in the 1973, 1980s, 1995 and 2004 enlargements, if those countries had not joined the EU. We find large positive effects from EU membership but these differ across countries and over time (they are only negative for Greece). We calculate that without deep economic and political integration, per capita incomes would have been, on average, approximately 12 percent lower.
    Keywords: economic growth, European Union, synthetic counterfactuals
    JEL: C33 F15 F43 O52
    Date: 2014–04
  12. By: Billon, Steve; Gillanders, Robert
    Abstract: Using data from the World Bank's Enterprise Surveys, we test two interesting results that emerge from the theoretical model presented in Shleifer and Vishny (1994) that studies bargaining between politicians and managers of state-owned firms. Shleifer and Vishny's model suggests that firms with more state ownership should tend to pay less in bribes but not have a different experience of costly obstacles imposed on them by politicians. In our full sample, the results suggest that a one percent increase in state ownership is associated with a $125 reduction in the total annual informal payment of the firm and with a 0.5% decrease in the probability that a firm will consider corruption to be an obstacle to their current operations. We refine these average relationships somewhat by splitting the sample by global region. Only in our Europe and Central Asia sample do we find strong evidence in support of the first result and in this sample we find a signifcant effect of state ownership on obstacles. In our Sub-Saharan Africa and Latin America and Caribbean samples we do not find a significant effect on either corruption outcome.
    Keywords: state ownership, corruption, privatisation, bribery
    JEL: D73 G32 L32 L33 P31
    Date: 2014–04
  13. By: Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy); Karimi, Arizo (IFAU - Institute for Evaluation of Labour Market and Education Policy); Nilsson, Peter (Institute for International Economic Studies (IIES), Stockholm University)
    Abstract: This paper studies gender differences in the extent to which social preferences affect workers' shirking decisions. Using exogenous variation in work absence induced by a randomized field experiment that increased treated workers' absence, we find that also non-treated workers increased their absence as a response. Furthermore, we find that male workers react more strongly to decreased monitoring, but no significant gender difference in the extent to which workers are influenced by peers. However, our results suggest significant heterogeneity in the degree of influence that male and female workers exert on each other: conditional on the potential exposure to same-sex co-workers, men are only affected by their male peers, and women are only affected by their female peers.
    Keywords: Peer effects; employer-employee data; work absence; randomized field experiment
    JEL: C23 C93 J24
    Date: 2014–04–15

This nep-pol issue is ©2014 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.