nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒06‒11
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Social Polarization and Partisan Voting in Representative Democracies By Dominik Duell; Justin Mattias Valasek
  2. Local Candidates and Distributive Politics under Closed-list Proportional Representation By Jon H. Fiva; Askill Halse; Daniel M. Smith
  3. The Effects of Immigration in Developed Countries: Insights from Recent Economic Research By Anthony Edo; Lionel Ragot; Hillel Rapoport; Sulin Sardoschau; Andreas Steinmayr
  4. Women's Representation and Electoral System Reform in Papua New Guinea: The Limitations of Limited Preferential Voting By Kerryn Baker
  5. News Media and Crime Perceptions: Evidence from a Natural Experiment By Mastrorocco, Nicola; Minale, Luigi
  6. National Identity under Economic Integration By Chiang, Chun-Fang; Liu, Jin-Tan; Wen, Tsai-Wei
  7. The politics of implementation or why institutional interaction matters: The role of traditional authorities in delivering pro-poor social policies in Kenya By Barbara Rohregger; Katja Bender; Bethuel Kinuthia; Esther Schüring; Grace Ikua; Nicky Pouw
  8. Everybody's a Victim? Global Terror, Well-Being and Political Attitudes By Akay, Alpaslan; Bargain, Olivier; Elsayed, Ahmed
  9. Women's Political Power and Environmental Outcomes By Georgios Voucharas; Dimitrios Xefteris
  10. Tracing policy influence of diffuse interests: The post-crisis consumer finance protection politics in the US By Lisa Kastner
  11. Capital Income Taxation, Economic Growth, and the Politics of Public Education By Ono, Tetsuo; Uchida, Yuki

  1. By: Dominik Duell; Justin Mattias Valasek
    Abstract: While scholars and pundits alike have expressed concern regarding increasing social polarization based on partisan identity, there has been little analysis of how social polarization impacts voting. In this paper, we incorporate social identity into a principal-agent model of political representation and characterize the influence of social polarization on partisan voting. We show that social identity has an indirect effect on voting through voters’ beliefs regarding the ex post decision of political representatives on top of a direct effect through an expressive channel. We conduct a laboratory experiment designed to identify the relative effect of the two channels. We find that social polarization causes partisan voting, and that up to fifty-five percent of partisan voting is due to the indirect effect of social identity.
    Keywords: social identity, partisan voting, social polarization, political polarization
    JEL: D72
    Date: 2018
  2. By: Jon H. Fiva; Askill Halse; Daniel M. Smith
    Abstract: Geographic representation is an important consideration in candidate nominations, even under closed-list proportional representation (PR), and may even matter for distributive policy outcomes. However, since nominations are determined strategically, the causal effects of local representation are difficult to identify. We investigate the relationship between local representation and electoral and distributive politics in the closed-list PR setting of Norway. Exploiting as-good-as-random election outcomes for marginal candidates, we find that parties obtain higher support in subsequent elections in the hometowns of narrowly-elected candidates. This effect appears to be driven by the local candidate appearing at the top of the party list in the next election. However, we find no evidence that representation results in geographically targeted policy benefits going to the candidates’ hometowns.
    Keywords: distributive politics, representation, voting behavior
    JEL: D72
    Date: 2018
  3. By: Anthony Edo; Lionel Ragot; Hillel Rapoport; Sulin Sardoschau; Andreas Steinmayr
    Abstract: The rise in international migration over the past decades and particularly the recent influx of refugees to the European Union has given more audience to the economic and political consequences of immigration. A major concern in the public debate is that immigrants could take jobs from natives, reduce their wages and negatively contribute to public finances. At the same time, the rise of right-wing populist movements has brought to light that the skepticism towards immigrants and refugees may not only be based only on economic but also on cultural considerations. This report is devoted to investigating these considerations by carefully relying on the existing evidence. We thus study the vast literature on the effects of immigration on the labor market and welfare system in host societies, as well as the more recent literature on the attitudinal and political consequences of immigration. The literature on the labor market impact of immigration indicates that immigration has a negligible average impact on the wages and employment of native workers. However, because adjustments take time, particularly when immigration is unexpected, the initial and longer run impacts of immigration can differ. The average impact of immigration on public finance is also negligible, sometimes slightly positive or slightly negative. We also document that immigration can have distributional consequences. In particular, the age and educational structure of immigrants plays an important role in determining their impact on the labor market and public finances. The fact that immigration is sometimes perceived as a factor depressing economic outcomes in host countries tends to affect native attitudes and electoral outcomes. In this regard, the literature first suggests that cultural concerns is the main driving force behind the skepticism towards immigration and that fiscal or labor market concerns only play a secondary role. Second, immigration tends to reduce the support for redistribution among native workers. Third, the effect of local level exposure to immigrants and refugees on native attitudes towards immigrants and extreme voting has been found to vary by context and can be positive or negative.
    Keywords: Immigration;Labour Market;Public finance;Redistribution; Voting
    JEL: D72 E62 F22 H62 J15
    Date: 2018–04
  4. By: Kerryn Baker
    Abstract: Papua New Guinea moved to a limited preferential voting (LPV) system prior to the 2007 national election. The shift from first†past†the†post to preferential voting was intended to encourage the election of candidates with broader mandates from constituents; to reverse the trend of increasing election†related violence; and to lead to more cooperation between candidates and voting blocs. It was also anticipated that instituting a preferential system would increase the electoral chances of female candidates. This article looks at the impact of the LPV system on women's participation and performances as candidates in Papua New Guinean elections since 2002, focusing in particular on the three general elections in 2007, 2012 and 2017. It argues that the benefits of LPV have not outweighed its costs, at least in terms of women's participation and representation. This demonstrates the limits of institutional reform of this nature in tackling deep†seated issues relating to political culture.
    Keywords: Papua New Guinea, electoral reform, women's representation, elections, political participation
    Date: 2018–05–21
  5. By: Mastrorocco, Nicola (Trinity College Dublin); Minale, Luigi (Universidad Carlos III de Madrid)
    Abstract: In democracies voters rely on media outlets to learn about politically salient issues. This raises an important question: how strongly can media affect public perceptions? This paper uses a natural experiment – the staggered introduction of the Digital TV signal in Italy – to measure the effect of media persuasion on the perceptions individuals hold. We focus on crime perceptions and, combining channel-specific viewership and content data, we show that the reduced exposure to channels characterized by high levels of crime reporting decreases individual concerns about crime. The effect is driven by individuals aged 50 and over, who turn out to be more exposed to television while using other sources of information less frequently. Finally, we provide some evidence about the effect of the digital introduction on public policies closely related to crime perceptions and on voting behavior.
    Keywords: information, news media, persuasion, crime perceptions
    JEL: D72 D83 K42 L82
    Date: 2018–04
  6. By: Chiang, Chun-Fang; Liu, Jin-Tan; Wen, Tsai-Wei
    Abstract: This study empirically investigates how economic integration influences individuals’ national identity. Due to historical reasons and unique cross-strait politics, some people in Taiwan identify themselves as Chinese while others identify themselves as Taiwanese. Using individual survey data with the outward investment data at the industry level from 1992 to 2009, we find that the rising investment in China has strengthened Taiwanese identity and has reduced the probability of voting for the Pan-Blue parties. The effects are much stronger for unskilled workers than for skilled workers, suggesting that outward investment in China may not only have economic impact on the economy but may also deepen the political polarization in Taiwan.
    Keywords: identity,economic integration,voting behavior
    JEL: F50 Z10 D72
    Date: 2018
  7. By: Barbara Rohregger (International Centre for Sustainable Development (IZNE), Bonn-Rhein-Sieg University of Applied Sciences); Katja Bender; Bethuel Kinuthia; Esther Schüring; Grace Ikua; Nicky Pouw
    Abstract: The paper contributes to the debate on the political economy of implementation of propoor social policy. It argues for a broadening of the debate, which is dominated by technocratic arguments, emphasizing the lack of financial resources, technology or skills as the major barriers for effective implementation. Describing the dynamic interplay of ‘formal’ operational programme structures and ‘informal’ traditional institutions in delivering the CT-OVC – the largest and oldest cash transfer programme in Kenya – it argues for the need to look more closely into the local political economy as an important mediating arena for implementing social policies. Implementation is heavily contingent upon the local social, political and institutional context that influences and shapes its outcomes. These processes are highly dynamic and ambivalent evolving between ‘formal’ and ‘informal’ structures and institutions. They may change over time and place, challenging the implicit assumption that programmes are evenly implemented across geographic and political entities.
    Keywords: Social policies, Kenya, local political economy, traditional authorities, devolution
    JEL: I38
    Date: 2018–05
  8. By: Akay, Alpaslan (Department of Economics, School of Business, Economics and Law, Göteborg University); Bargain, Olivier (Bordeaux University and the Institut Universitaire de France (France)); Elsayed, Ahmed (IZA (Germany))
    Abstract: Terror has become a global issue. Terror acts perpetuated by religious, nationalist or political groups around the globe can propagate distress rapidly through different channels and possibly change political attitudes. This paper suggests the first evaluation of the impact of global terror on human welfare. We combine panel datasets for Australia, Germany, Russia, Switzerland, the UK and the US. Individual well-being informationfor 750,000 individualxyear observations, recorded on precise dates, is matched with daily information on the 70,000 terror events that took place worldwide during 1994-2013. High-frequency data and quasi-random terror shocks of varying intensity provide the conditions for robust inference, while external validity is guaranteed by the use of large representative samples. We find a significantly negative effect of global terror on well-being, with a money-metric cost of around 6% - 17% of national income. Among diffusion channels, stock markets and economic anticipations play a minimal role, while traditional media filter the most salient events. The effect is greatly modulated by the physical, genetic or cultural proximity to the terror regions/victims. For a subset of countries, we also show that global terror has significantly increased the intention to vote for conservative parties. Heterogeneity analyses point to the mediating effect of risk perception: individuals who exhibit stronger emotional responses to terror possibly more exposed to potential threats - are also more likely to experience a conservative shift.
    Keywords: Global Terror; Subjective Well-Being; Media; Political Attitudes
    JEL: C99 D60 D72 D74 I31
    Date: 2018–06
  9. By: Georgios Voucharas; Dimitrios Xefteris
    Abstract: Environmental deterioration is believed to affect women more than men. Thus, in the context of democratic decision-making, an increase in the political power of women should lead to better environmental outcomes. In this paper, we test this intuition by estimating how suffrage rights affected countries' emissions using data for the period 1850-2014. By employing a) a difference-in-difference empirical strategy a la Miller (2008) and b) a calibrated regression discontinuity design that focuses on the few years before and after the suffrage reform, we provide -for the first time- robust evidence suggesting that environmental outcomes strongly depend on the extent of women's political participation.
    Keywords: women's suffrage; emissions; voting rights; political economy; environmental outcomes.
    Date: 2018–05
  10. By: Lisa Kastner (Centre d'études européennes et de politique comparée)
    Abstract: Dodd–Frank, the financial reform law passed in the United States in response to the 2008 financial crisis, established the Consumer Financial Protection Bureau, a new federal regulator with the sole responsibility of protecting consumers from unfair, deceptive, or abusive practices. This decision marked the end of a highly politicized reform debate in the US Congress, in which proponents of the new bureau would normally have been considered to be much weaker than its opponents. Paradoxically, an emerging civil society coalition successfully lobbied decision-makers and countered industry attempts to prevent industry capture. What explains the fact that rather weak and peripheral actors prevailed over more resourceful and dominant actors? The goal of this study is to examine and challenge questions of regulatory capture by concentrated industry interests in the reform debates in response to the credit crisis which originated in the US in 2007. The analysis suggests that for weak actors to prevail in policy conflicts over established, resource-rich opponents, they must undertake broad coalition building among themselves and with influential elite allies outside and inside of Congress who share the same policy goals.
    Keywords: Financial crisis; Financial regulation; Consumer protection; Interest groups; Lobbying
    Date: 2017
  11. By: Ono, Tetsuo; Uchida, Yuki
    Abstract: This study considers the politics of public education and its impacts on economic growth and welfare across generations. Public education is funded by taxing the labor income of the working generation and capital income of the retired. We employ probabilistic voting to demonstrate the politics of taxes and expenditure and show that aging results in a shift of the tax burden from the old to the young and a slowdown of economic growth. We then consider three alternative constraints that limit the choice of taxes and/or expenditure: a minimum level of public education expenditure, an upper limit of the capital income tax rate, and a combination of the two. These constraints all create a trade-off between current and future generations in terms of welfare.
    Keywords: Public education, Economic growth, Capital income tax, Political equilibrium
    JEL: D70 E24 H52
    Date: 2018–02–20

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