nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒09‒11
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. The political economy of EU-funds in Poland: evidence for the period 2007-2013 By Monika Banaszewska; Ivo Bischoff
  2. The Base of Party Political Support in Ireland: A New Approach By David (David Patrick) Madden
  3. Precision-Guided or Blunt? The Effects of US Economic Sanctions on Human Rights By Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
  4. Local Government Proliferation, Diversity, and Conflict By Samuel Bazzi; Matthew Gudgeon
  5. Changes in the Age Structure of the Population and Their Social and Political Consequences By Korotaev, Andrey Vitalievich; Shulgin, Sergei; Arkhangelskiy , Vladimir; Zinkina, Yulia Viktorovna
  6. Political corruption in the execution of public contracts By Chiappinelli, Olga
  7. Fiscal Federalism, Taxation and Grants By Gonzalez-Eiras, Martin; Niepelt, Dirk
  8. Economic Development and Preferences for Redistribution By Hideaki Goto

  1. By: Monika Banaszewska (Poznan University of Economics and Business); Ivo Bischoff (University of Kassel)
    Abstract: We provide an empirical study analysing the distribution of EU funds among 2478 Polish municipalities in the period of the multiannual financial framework 2007–2013. We find EU funds to be concentrated in smaller municipalities and economically weak sub-regions. Expenditures of EU funds per capita do not decrease in the municipalities’ fiscal capacity. This indicates that co-funding restrictions imposed by the EU did not prevent fiscally weak municipalities from attracting EU funds. Our primary focus rests on the question whether regional governments use their prominent role in the allocation process for EU funds to support their own political self-interest. Difference-in-difference estimations show that the answer is affirmative: Municipalities aligned with the regional government spend more EU funds per capita than nonaligned municipalities. Furthermore, we find support for the swing-district hypothesis: EU funds per capita decrease in the vote-share differential between the two leading parties.
    Keywords: EU, Cohesion funds, Poland, local government, party alignment, swing districts, vertical grants
    JEL: D72 H77
    Date: 2016
  2. By: David (David Patrick) Madden
    Abstract: Party politics in Ireland has been characterised as politics without a social base. This paper calculates political concentration indices for party support in Ireland showing how support for a particular party is concentrated according to identifiable dimensions such as income, education and age. Using data from the European Social Survey, these indices are calculated with respect to elections in 2002, 2007 and 2011. There is evidence of a clear social base emerging after the 2011 election with support for the Fine Gael party concentrated amongst the richer and more educated, while support for Sinn Fein is concentrated amongst lower income and less educated. Preliminary data from the 2016 election is consistent with these developments.
    Keywords: Party support; Social base; Concentration index
    JEL: D72
    Date: 2016–08
  3. By: Jerg Gutmann (University of Hamburg); Matthias Neuenkirch (University of Trier); Florian Neumeier (University of Marburg)
    Abstract: We use endogenous treatment-regression models to estimate the causal average treatment effect of US economic sanctions on four types of human rights. In contrast to previous studies, we find no support for adverse effects of sanctions on economic rights, political and civil rights, and basic human rights. With respect to women’s rights, our findings even indicate a positive relationship. Emancipatory rights are, on average, strengthened when a country faces sanctions by the US. Our findings are robust when applying various changes to the empirical specification. Most importantly, this study provides strong evidence that the endogeneity of treatment assignment must be modelled when the consequences of sanctions are studied empirically.
    Keywords: Democratization, Discrimination, Economic Sanctions, Endogenous Treatment Model, Human Rights, Interventionism, Protectionism, Repression, United States
    JEL: F51 F52 F53 K10 K11 P14 P16 P26
    Date: 2016
  4. By: Samuel Bazzi (Boston University and The Bureau for Research and Economic Analysis of Development (BREAD)); Matthew Gudgeon (Boston University)
    Abstract: The creation of new local governments is a pervasive feature of decentralization in developing countries. This redistricting process often causes substantial changes in two widely debated sources of conflict: diversity and contestable public resources. Using new geospatial data on violence and the plausibly exogenous timing of district creation in Indonesia, we show that allowing for redistricting along group lines can reduce conflict. However, these reductions are undone and even reversed if the newly defined electorates are ethnically polarized, particularly in areas that receive an entirely new seat of government. We highlight changes in the salience of ethnic cleavages as a key mechanism driving the violent contestation of political control. Overall, the findings illustrate the policy tradeoffs associated with redistricting and offer novel insight into the instrumental role of ethnicity in shaping conflict.
    Keywords: Indonesia, Violence, Political Development, Demographic/Socioeconomic
    JEL: D72 D74 H41 H77 O13 Q34
    Date: 2016–09
  5. By: Korotaev, Andrey Vitalievich (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Shulgin, Sergei (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Arkhangelskiy , Vladimir (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Zinkina, Yulia Viktorovna (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: In this work, utilising United Nations population projections and the index of instability of states, the possible implications of demographic change in the age structure of the regional and global level are analyzed. The changes in the age structure of the population and the possible consequences of changes in the age structure are analyzed using the World Values Survey data (World Values Survey), both for individual countries and for entire groups of countries.
    Keywords: United Nations, population, demography, age structure
    Date: 2016–06–07
  6. By: Chiappinelli, Olga
    Abstract: This paper presents a novel theory of corruption in public procurement. It considers an agency setting of contract execution where the principal is a politician who can commit to a contract auditing policy. It is found that a benevolent politician, by choosing a sufficiently strict auditing, deters the contracting firm from padding costs; conversely, a selfish politician chooses a relatively lax auditing in order to create an incentive for cost-padding, and engages in corruption with the firm in case of detection. If the cost of auditing is high enough, even a benevolent politician might prefer to allow cost-padding.
    Keywords: Corruption in procurement; Cost-padding; Selfish politician; Endogenous auditing; Procurement contracts; Principal-agent model.
    JEL: D73 D82 L51
    Date: 2016
  7. By: Gonzalez-Eiras, Martin; Niepelt, Dirk
    Abstract: We propose a theory of tax centralization and inter governmental grants in politico-economic equilibrium. The cost of taxation differs across levels of government because voters internalize general equilibrium effects at the central but not at the local level. This renders the degree of tax centralization and the tax burden determinate even if none of the traditional, expenditure-related motives for centralization considered in the fiscal federalism literature is present. If central and local spending are complements and the trade-off between the cost of taxation and the benefit of spending is perceived differently across levels of government, inter governmental grants become relevant. Calibrated to U.S. data, our model helps to explain the introduction of federal grants at the time of the New Deal, and their increase up to the turn of the twenty-first century. Grants are predicted to increase to approximately 5.5% of GDP by 2060.
    Keywords: Fiscal Federalism; Grants; Markov equilibrium; Politico-economic equilibrium; Public Goods
    JEL: D72 E62 H41 H77
    Date: 2016–08
  8. By: Hideaki Goto (International University of University)
    Abstract: This study empirically analyzes whether people's preferences for redistribution change as their countries develop. The results show that after controlling for income inequality, political orientation, and demographic and institutional factors, among others, people in more developed countries are more in favor of redistribution. This implies that concern for, or a social norm of caring about, the poor grows as a country becomes richer.
    Keywords: Redistribution, GDP per capita, Social preferences, Social norms
    JEL: D31 D63 H20
    Date: 2016–08

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