nep-pol New Economics Papers
on Positive Political Economics
Issue of 2017‒10‒15
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Washington Slept Here: How Donald Trump Caught the Politicians Napping on Trade By Craig VanGrasstek VanGrasstek
  2. Explaining a Paradox of Democracy: The Role of Institutions in Female Enfranchisement By Anna Maria Koukal; Reiner Eichenberger
  3. Electoral Cycles, Partisan Effects and U.S. Naturalization Policies By Markus Drometer; Romuald Méango
  4. Who Runs? Honesty and Self-Selection into Politics By Fehrler, Sebastian; Fischbacher, Urs; Schneider, Maik
  5. The fallacy of the globalization trilemma: reframing the political economy ofglobalization and implications for democracy By Thomas I. Palley
  6. The patronage effect: a theoretical perspective of patronage and political selection By Federico Quaresima; Fabio Fiorillo
  7. Businesspeople in Elected Office: Identifying Private Benefits from Firm-Level Returns By David Szakonyi
  8. Trade Shocks and Far-Right Voting: Evidence from French Presidential Elections By Clément Malgouyres
  9. Political fragmentation and fiscal policy: Evidence from German municipalities By Bernard, René
  10. The Swing Voter's Curse in Social Networks By Mechtenberg, Lydia; Büchel, Berno
  11. Democratic Involvement and Immigrants’ Compliance with the Law By Slotwinski, Michaela; Stutzer, Alois; Gorinas, Cédric
  12. Preventing the Tyranny of the Majority - Experimental Evidence on the Choice of Voting Thresholds in Bayesian Games By Engelmann, Dirk; Grüner, Hans Peter; Hoffmann, Timo; Possajennikov, Alex

  1. By: Craig VanGrasstek VanGrasstek
    Abstract: This paper explores how Donald Trump managed first to secure the Republican Party nomination, and then an upset victory in the general election, by running on an unapologetically protectionist platform. It argues Trump filled a political vacuum by taking positions long rejected by political professionals in both major parties and appealing to a class of potential voters that had been neglected. The analysis starts with a review of the decades-long economic transition in which producers of labor-intensive goods either became more international, thus switching from a protectionist to a pro-trade orientation, or died, thus becoming politically irrelevant. The net result was a reduction in the demand for and use of protectionist measures, and a steep decline in the political salience of trade (as measured in bills dealing with trade issues introduced in Congress, in the prominence of trade on White House agendas, and campaign promises to restrict imports). Trump recognized the large and untapped reservoir of potential votes in the post-industrial underclass that globalization left behind, and succeeded by prosecuting an unorthodox pro-protectionism campaign in which the usual sources of pro-trade campaign finance were rendered irrelevant.
    Keywords: US trade policy, public policy, protectionism, US Presidential election
    JEL: D72 F13 J58
    Date: 2017–01
  2. By: Anna Maria Koukal; Reiner Eichenberger
    Abstract: Switzerland is known for its highly developed direct democracy. However, Swiss women were enfranchised at the federal level only in 1971 and in many cantons even later. We analyze the role of direct democracy in the delayed Swiss enfranchising process by investigating a novel dataset covering referenda among males about enfranchising women. Applying a difference-in-differences approach, we shed light on the conditions under which strong local direct democracy becomes a barrier to women’s suffrage. Our results are consistent with direct democracy having two effects: it boosts men’s demand to enfranchise women, but it also increases the price for men to do so. Depending on the specific conditions of the vote, the former or the latter effect dominates.
    Keywords: women’s suffrage; municipal institutions; direct democracy
    JEL: D72 J16 N24 N44 P16
    Date: 2017–10
  3. By: Markus Drometer; Romuald Méango
    Abstract: Using a panel of naturalizations in U.S. states from 1965 to 2012, we empirically analyze the impact of elections on naturalization policy. Our results indicate that naturalization policy is (partly) driven by national elections: there are more naturalizations in presidential election years and during the terms of Democratic incumbents. We then investigate the dynamics of an incumbent’s behavior over the course of the his term in detail, finding that the effects are more pronounced in politically contested states and for immigrants originating from Latin America.
    Keywords: Electoral cycles, naturalization policy
    JEL: H11 D72 F22
    Date: 2017
  4. By: Fehrler, Sebastian; Fischbacher, Urs; Schneider, Maik
    Abstract: We examine the incentives to self-select into politics. To this end, we set up a two-stage political competition model and test its key mechanisms in the lab. At the entry stage, potential candidates compete in a contest to become their party’s nominee. At the election stage, the nominated candidates campaign by making non-binding promises to voters. Confirming the model’s key predictions, we find that dishonest people over-proportionally self-select into the political race.
    JEL: C92 D71 D83
    Date: 2017
  5. By: Thomas I. Palley
    Abstract: This paper argues Rodrik?s (2011) globalization trilemma is analytically mistaken. Rather than a trilemma, globalization poses a dilemma between more globalization and reduced national policy space. Not only may globalization shrink policy space, it may also twist it. The character of the twist depends on the type of globalization. There is no inherent contradiction between globalization and the democratic nation state. However, globalization has significant implications for the content of democratic politics which it tends to restrict. Furthermore, globalization can generate policy lock-in (Palley, 2017) which permanently reduces policy space. That has enormous implications for democracy and future democratic policymaking.
    Keywords: Globalization, trilemma, dilemma, policy space, policy lock-in,democracy
    JEL: F0 F02 F50
    Date: 2017
  6. By: Federico Quaresima (Università Politecnica delle Marche, Ancona); Fabio Fiorillo (Università Politecnica delle Marche, Ancona)
    Abstract: This article investigates the patronage phenomenon under a theoret- ical point of view. Legislative dissent could have damaging effects for both party and legislator, i.e., legislators depend on their party for re- election, which in turn partially depends on its reputation of cohesiveness. Nevetheless dissent allows the legislator to build a good reputation with local constituents for re-election sake. Then parties may sometimes bene- fit from tolerating some level of dissent. As a result the party has a double goal. It should require the maximum loyalty from legislators, not ignoring the legislators' reputation with the voters. In this paper we consider pa- tronage as an additional tool for the party to calibrate parlamentarians' loyalty towards the party itself and towards constituencies.
    Keywords: Patronage, political selection, exit strategy, bureaucracy
    JEL: D72 D73
    Date: 2017–09
  7. By: David Szakonyi (George Washington University and ICSID)
    Abstract: Do businesspeople that win elected office use their positions to help their firms? Busi- nessperson politicians are common worldwide, but little is known about the consequences of their entrance into politics. Using an original dataset of 2,706 firms in Russia, I employ a regression discontinuity design to identify the causal effect of firm directors winning seats in subnational legislatures in 2004-2013. I show that having a connection to a winning candidate increases a firm’s revenue by 60% and profit margin by 15% over their term in office. I then test between different mechanisms, finding that connected firms improve their performance by gaining access to bureaucrats, and not by signaling legitimacy to financiers. The value of win- ning a seat increases in more politically competitive regions, but falls markedly when more businesspeople win office in a convocation. Politically connected firms extract fewer benefits when faced with greater competition from other rent-seekers.
    Date: 2017
  8. By: Clément Malgouyres
    Abstract: The rise of radical right parties is a Europe-wide phenomenon. While many studies describe the individual or regional characteristics associated with high propensity to vote for the far-right, we know little about the causal impact of economic shocks on electoral support for the far-right. Over the period 1995-2012, we examine the impact of trade-shocks, measured as exposure to low-wage country import competition, on the local vote share of the National Front, the French main far-right party, during presidential elections. We use small communities (cantons) as units of observations and include province (département) fixed effects, so that the identifying variation comes from within-province change in imports exposure over time. We find evidence of a small but significantly positive impact of import competition exposure on votes for the far-right: a one standard-deviation increase in imports-per-worker causes the change in the far-right share to increase by 7 percent of a standard deviation. Further results suggest that this effect has been increasing over the time period considered. We conduct a simple sensitivity test supporting the notion that(i) omitting local share of immigrants is likely to bias our estimate downward, and that(ii) this bias is likely to negligible.
    Keywords: Far-Right, Voting Behavior, Local Labor Markets, Trade, import competition
    Date: 2017–03
  9. By: Bernard, René
    Abstract: The government fragmentation hypothesis (GFH) states that coalition governments spend more than single-party governments due to an underlying common pool problem. Using a large panel data set on 604 local governments in the German state of Baden-Württemberg for the 1994-2014 period, I test the GFH for tax rates, the growth in government debt as well as expenditures and its sub-categories. Studies using standard regression methods fail to identify causal effect as the type of government is generally not random. I apply a RDD, that exploits quasi-random variation generated by close elections. I add external validity to the recent quasi-experimental literature by investigating the GFH for a mayor-council system. I find that contrary to the theoretical prediction, coalition governments do not increase taxes and government debt. There is a non-robust, negative effect on total expenditures, which is mainly driven by administrative expenditures and material expenditures.
    Keywords: government fragmentation,common pool problems,legislative policy-making,government spending,local fiscal policy,local taxation,local elections,municipality data,regression discontinuity design,Fragmentierung der Regierung,Common Pool Problem,Gesetzgebung und politische Entscheidungsfindung,Staatsausgaben,kommunale Finanzpolitik,kommunale Steuern,Kommunalwahlen,Gemeindedaten,Regressions-Diskontinuitäts-Design
    JEL: C21 D72 D78 H11 H71 H72
    Date: 2017
  10. By: Mechtenberg, Lydia; Büchel, Berno
    Abstract: We study private communication in social networks prior to a majority vote on two alternative policies. Some (or all) agents receive a private imperfect signal about which policy is correct. They can, but need not, recommend a policy to their neighbors in the social network prior to the vote. We show that communication can undermine effciency of the vote and hence reduce welfare in a common interest setting. We test the model in a lab experiment and find strong support for the predicted effects.
    JEL: D72 D83 D85 C91
    Date: 2017
  11. By: Slotwinski, Michaela; Stutzer, Alois; Gorinas, Cédric
    Abstract: In the face of migration and concerns about integration, we investigate how the right to vote in local elections affects immigrants’ compliance with the law. In our study for Denmark, we exploit an institutional regulation that grants foreigners local voting rights after three years of stay. Relying on register data, we find causal evidence that the first possibility to vote considerably reduces the number of legal offenses of non-Western male immigrants in the time after elections.
    JEL: D02 K42 J15
    Date: 2017
  12. By: Engelmann, Dirk; Grüner, Hans Peter; Hoffmann, Timo; Possajennikov, Alex
    Abstract: In democracies, an absolute majority of the population may choose policies that are harmful to the rest of the population. A purpose of super-majority rules is to prevent this from happening. We study whether individuals optimally choose sub- or super-majority rules when the rights of minorities should be protected. Subjects propose more extreme voting rules for more skewed distributions, but we also find that rule choices are biased towards balanced rules, leading substantial welfare losses.
    JEL: C91
    Date: 2017

This nep-pol issue is ©2017 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.