nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒12‒17
nineteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Abandon ship? Party brands and politicians’responses to a political scandal By Gianmarco Daniele; Benny Geys; Sergio Galletta
  2. The Geography of Repression and Support for Democracy: Evidence from the Pinochet Dictatorship By María Angelica Bautista; Felipe González; Luis R. Martínez; Pablo Munoz; Mounu Prem
  3. Distributive politics inside the city? The political economy of Spain’s plan E By Felipe Carozzi; Luca Repetto
  4. Electoral Systems and Income Inequality: A Tale of Political Equality By Zuazu Bermejo, Izaskun
  5. Popularity shocks and political selection By Gianmarco Daniele; Francisco Cavalcanti; Sergio Galletta
  6. Do Electoral Rules Matter for Female Representation? By Paola Profeta; Eleanor Woodhouse
  7. Corrupted Votes and Rule Compliance By Arno Apffelstaedt; Jana Freundt; ;
  8. Electoral cycles in perceived corruption: International empirical evidence By Niklas Potrafke
  9. The institutional determinants of Southern secession By Mario Chacón; Jeffrey Jensen
  10. Sincere voting, strategic voting A laboratory experiment using alternative proportional systems By Isabelle Lebon; Antoinette Baujard; Frédéric Gavrel; Herrade Igersheim; Jean-François Laslier
  11. The Effect of Initial Inequality on Meritocracy: a Voting Experiment on Tax Redistribution By Natalia Jimenez; Elena Molis-Bañales; Angel Solano-Garcia
  12. Immigrant Voters, Taxation and the Size of the Welfare State By Arnaud Chevalier; Benjamin Elsner; Andreas Lichter; Nico Pestel
  13. Globalization and political structure By Gino Gancia; Giacomo A. M. Ponzetto; Jaume Ventura
  14. Political Distrust in Europe: the Impact of Immigration and the Global Economic Crisis By Anne Marie Jeannet
  15. Variable Competence and Collective Performance: Unanimity vs. Simple Majority Rule By BAHARAD, Eyal; BEN-YASHAR, Ruth; NITZAN, Shmuel
  16. Is It Worth It? On the Returns to Holding Political Office By Berg, Heléne
  17. Inequality, Privatization and Democratic Institutions in Developing Countries By Lidia Ceriani; Simona Scabrosetti; Francesco Scervini
  18. Buying Votes and International Organizations: The Dirty Work-Hypothesis By Axel Dreher; Valentin F. Lang; B. Peter Rosendorff; James Raymond Vreeland
  19. Political Contributions and Public Procurement: Evidence from Lithuania By Audinga Beltrunaite

  1. By: Gianmarco Daniele (Bocconi University (Baffi Carefin) & Institut d’Economia de Barcelona (IEB)); Benny Geys (BI Norwegian Business School); Sergio Galletta (Universitat de Barcelona, Institut d’Economia de Barcelona (IEB), Institute of Economics (IdEP) & University of Lugano (USI))
    Abstract: How do politicians react to a political earthquake? In this article, we study politicians’ – rather than voters’ – responses to the main political scandal in Italian recent history (Tangentopoli), and overcome endogeneity concerns by analysing the local implications of this national corruption scandal. We find that local politicians withdraw support for incumbents in parties hit by Tangentopoli – inducing early government terminations in such municipalities. Moreover, politicians in parties hit by the scandal exhibit higher rates of party switching and lower re-running rates. By decreasing the value of the party “brand”, scandals thus become transmitted across politicians and levels of government via partisan cues.
    Keywords: Accountability, corruption, party cues, brands, multi-level governance
    JEL: D72 H30 H77
    Date: 2018
  2. By: María Angelica Bautista; Felipe González; Luis R. Martínez; Pablo Munoz; Mounu Prem
    Abstract: We show that exposure to repression under dictatorship increases support for democracy and contributes to regime change when a democratic window of opportunity arises. Studying the military dictatorship of Augusto Pinochet in Chile, we exploit the fact that the predetermined location of military bases predicts local levels of civilian victimization, but is unrelated to historical political preferences. Using two-stage least squares, we show that increased exposure to repression during the dictatorship led to higher voter registration and higher opposition to Pinochet’s continuation in power in the 1988 plebiscite that triggered the democratic transition. Complementary survey data confirms that individuals with greater exposure to repression during the military regime continue to have stronger preferences for democracy. However, exposure to repression does not affect election outcomes after democratization.
    Keywords: Chile, human rights, repression, dictatorship, democratization, elections
    JEL: D72 N46
    Date: 2018–12–03
  3. By: Felipe Carozzi (London School of Economics); Luca Repetto (Uppsala University)
    Abstract: We study distributive politics inside cities by analysing how local governments allocate investment projects to voters across neighbourhoods. In particular, we ask whether politicians use investment to target their own supporters. To this aim, we use detailed geo-located investment data from Plan E, a large fiscal stimulus program carried out in Spain in 2009-2011. Our empirical strategy is based on a close-elections regression-discontinuity design. In contrast to previous studies – which use aggregate data at the district or municipal level – we exploit spatial variation in both investment and voter support within municipalities and find no evidence of supporter targeting. Complementary results indicate that voters may be responding to investment by increasing turnout. Overall, our findings suggest that distributive politics only play a minor role inside the city.
    Keywords: Political economy, distributive politics, partisan alignment, local governments
    JEL: H70 R53 D72
    Date: 2017
  4. By: Zuazu Bermejo, Izaskun
    Abstract: Political economy literature has so far failed to offer a consensus on the effect of political institutions such as regime type (democracy vs. autocracy) and electoral systems (majori- tarian vs. proportional representation) on within-country income inequality. Beyond the inequality effects of these de jure political institutions, this paper fi nds robust evidence that de facto distribution of political power crucially matters to income inequality. Based on a panel database of 121 countries for the period from 1960 to 2007, the results consistently associate even distributions of political power across socio-economic groups with lower levels of income inequality. The scale of this effect hinges upon the proportionality of electoral systems. However, regime type and electoral system are not consistently associated with a signi cant impact on income inequality.
    Keywords: political, equality, income, inequality, proportional, representation, system
    JEL: D63 D72 C23
    Date: 2018–10–23
  5. By: Gianmarco Daniele (Bocconi University (Baffi Carefin) & Institut d’Economia de Barcelona (IEB)); Francisco Cavalcanti (Universitat de Barcelona & Institut d’Economia de Barcelona (IEB)); Sergio Galletta (Universitat de Barcelona, Institut d’Economia de Barcelona (IEB), Institute of Economics (IdEP) & University of Lugano (USI))
    Abstract: We observe that popularity shocks are crucial for electoral accountability beyond their effects on voters’ behaviors. By focusing on Brazilian politics, we show that the disclosure of audit reports on the (mis)use of federal funds by local administrators affects the type of candidates who stand for election. When the audit finds low levels of corruption, the parties supporting the incumbent select less-educated candidates. On the contrary, parties pick more-educated candidates when the audit reveals a high level of corruption. These effects are stronger in municipalities that have easier access to local media.
    Keywords: Political selection, corruption, competence, local election, political parties
    JEL: D70 D72 D73
    Date: 2018
  6. By: Paola Profeta; Eleanor Woodhouse
    Abstract: How do electoral rules affect the representation of women? We collect panel data on the universe of Italian politicians from all levels of government over the period 1987-2013 and obtain a complete picture of the career paths of male and female politicians across the whole arc of their careers in public office. We use our unique dataset to analyse the effects on female political representation of an Italian reform which, in 2005, changed the electoral rule for national elections from (mostly) majoritarian to proportional, but did not affect sub-national level elections. We find that proportional electoral rules favour the election of women. We propose a new channel through which this result is obtained, related to the different nature of political competition in the two electoral systems: under proportional rules, parties place women less frequently in competitive seats. This is consistent with the fact that proportional systems value gender diversity more than majoritarian ones, while majoritarian systems rely on head-to-head electoral races, which are not gender neutral. We also find that electoral rules have weaker effects on female representation in geographical areas where traditional gender roles are dominant.
    Keywords: Electoral reforms; Majoritarian; Proportional; Electoral Competition; Political Selection, Difference-in-Differences
    Date: 2018–06
  7. By: Arno Apffelstaedt; Jana Freundt (Philosophy, Politics and Economics, University of Pennsylvania); ;
    Abstract: We study experimentally how people’s willingness to comply with elected rules is affected by voter manipulation and disenfranchisement. Groups of 100 subjects vote on a “code of conduct” regarding behavior in a dictator game. Introducing a voting fee, offering subjects money to change their votes, or excluding the votes of low-income subjects leads to a strong decline in voluntary compliance with elected rules that ask subjects to give. Rules that ask subjects to not give see no decline. Heterogeneity in behavioral reactions suggests that treatment effects are driven by preferences for democratic participation and by preferences for unbiased election procedures.
    JEL: D02 D72 D91
    Date: 2018–12
  8. By: Niklas Potrafke
    Abstract: Perceived corruption in the public sector is measured by the reversed Transparency International’s Perception of Corruption Index (CPI). The dataset includes around 100 democracies over the period 2012–2016, a sample for which the CPI is comparable across countries and over time. The results show that the reversed CPI was about 0.4 points higher in election years than in other years, indicating that perceived corruption in the public sector increased before elections. The effect is especially pronounced before early elections (1.0 points) compared to regular elections (0.4 points). Future research needs to investigate why perceived corruption in the public sector increased before elections.
    Keywords: Perceived corruption, elections, political manipulation, panel data, democracies
    JEL: C23 D72 H11 K40
    Date: 2018
  9. By: Mario Chacón (New York University Abu Dhabi); Jeffrey Jensen (New York University Abu Dhabi)
    Abstract: We use the Southern secession movement of 1860-1861 to study how elites in democracy enact their preferred policies. Most states used specially convened conventions to determine whether or not to secede from the Union. We argue that although the delegates of these conventions were popularly elected, the electoral rules favored slaveholders. Using an original dataset of representation in each convention, we first demonstrate that slave-intensive districts were systematically overrepresented. Slave-holders were also spatially concentrated and could thereby obtain local pluralities in favor of secession more easily. As a result of these electoral biases, less than 10% of the electorate was sufficient to elect a majority of delegates in four of the six original Confederate states. We also show how delegates representing slave-intensive counties were more likely to support secession. These factors explain the disproportionate influence of slaveholders during the crisis and why secessionists strategically chose conventions over statewide referenda.
    Date: 2017
  10. By: Isabelle Lebon (CREM (UMR CNRS 6211), University of Caen Normandie, 14 000 Caen, France, and Condorcet Center); Antoinette Baujard (GATE Lyon Saint-Etienne (UMR CNRS 5824), University Jean Monnet and University of Lyon, 42 023 Saint-Etienne, France); Frédéric Gavrel (CREM (UMR CNRS 6211), University of Caen Normandie, 14 000 Caen, France, and Condorcet Center); Herrade Igersheim (CNRS and Beta (UMR CNRS 7522), University of Strasbourg, 67 085 Strasbourg, France); Jean-François Laslier (CNRS and PJSE (UMR CNRS 8545), 75014 Paris, France)
    Abstract: In two laboratory surveys run in France during the 2014 European Elections, we asked the participants to provide their personal evaluations of the parties in terms of ideological proximity, and asked how they would vote under three proportional, closed-list voting rules : the (official) single-vote rule, a split-my-vote rule, and a list-approval rule. The paper analyzes the relation between opinions and vote, under the three systems. Compared to multi-vote rules, the single-vote system leads to voters’ decisions that are more often strategic but also more often sincere. Sincere voting and strategic voting therefore appear to be more consistent than contradictory. Multi-vote rules allow the voter to express complex behavior, and the concepts of “sincere” and “strategic” voting are not always sufficient to render this complexity.
    Keywords: Approval voting, Cumulative voting, Proportional systems, Contextualized experiment, Laboratory experiment, Strategic voting
    JEL: D72 C93
    Date: 2018
  11. By: Natalia Jimenez (Department of Economics, Universidad Pablo de Olavide & Middlesex University); Elena Molis-Bañales (Departamento de Teoria e Historia Economica, University of Granada & Globe); Angel Solano-Garcia (Departamento de Teoria e Historia Economica, University of Granada & Globe)
    Abstract: According to Alesina and Angeletos (2005), societies are less redistributive but more efficient when the median voter believes that effort and talent are much more important than luck to determine income. We test these results through a lab experiment in which participants vote over the tax rate and their pre-tax income is determined according to their performance in a real effort task with leisure time. Subjects receive either a high or a low wage and this condition is either obtained through their talent in a tournament or randomly assigned. We compare subjects' decisions in these two different scenarios considering different levels of wage inequality. In our framework, this initial income inequality turns out to be crucial to support the theoretical hypothesis of Alesina and Angeletos (2005). Overall, we find that, only if the wage inequality is high, subjects choose a lower level of income redistribution and they provide a higher effort level in the scenario in which high-wage subjects are selected based on their talent through a tournament (than when it is randomly). Thus, we confirm almost all theoretical results in Alesina and Angeletos (2005) when the wage inequality is high enough. The big exception is for efficiency (measured as the sum of total payoffs), since theoretical results only hold for the scenario in which wage inequality is low.
    Keywords: income redistribution, voting, taxation, real-effort task, leisure.
    JEL: C92 D72 H30 J41
    Date: 2018–12
  12. By: Arnaud Chevalier; Benjamin Elsner; Andreas Lichter; Nico Pestel
    Abstract: This paper studies the impact of immigration on public policy setting. As a natural experiment, we exploit the sudden arrival of eight million forced migrants in West Germany after World War II. These migrants were on average poorer than the West German population, but unlike most international migrants they had full voting rights and were eligible for social welfare. Using panel data for West German cities and applying difference-in-differences and an instrumental variables approach, we show that local governments responded to this migration shock with selective and persistent tax raises as well as shifts in spending. In response to the inflow, farm and business owners were taxed more while residential property and wage bill taxes were left unchanged. Moreover, high-inflow cities significantly raised welfare spending while reducing spending on infrastructure and housing. Election data suggest that these policy changes were partly driven by the political influence of the immigrants: in high-inflow regions, the major parties were more likely to nominate immigrants as candidates, and a pro-immigrant party received high vote shares. We further document that this episode of mass immigration had lasting effects on people’s preferences for redistribution. In areas with larger inflows in the 1940s, people have substantially higher demand for redistribution more than 50 years later.
    Keywords: Migration; Taxation; Spending; Welfare state
    JEL: J61 H25
    Date: 2018–08
  13. By: Gino Gancia (CREI, Universitat Pompeu Fabra & Barcelona GSE); Giacomo A. M. Ponzetto (CREI, Universitat Pompeu Fabra & Barcelona GSE); Jaume Ventura (CREI, Universitat Pompeu Fabra & Barcelona GSE)
    Abstract: The first wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through war and conquest. The second wave of globalization (1950-present) has led instead to an increase in the number of countries to a record high of more than 190. Political fragmentation has been accompanied by the creation of peaceful structures of supranational governance. This paper develops a theoretical model of the interaction between globalization and political structure that accounts for these trends and their reversal. We show that political structure adapts to steadily expanding trade opportunities in a non-monotonic way. Borders hamper trade. In its early stages, the political response to globalization consists of removing borders by increasing country size. War is then an appealing way of conquering markets. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions. As a result, country size declines and negotiation replaces war as a tool to ensure market access.
    Keywords: Globalization, political structure, size of countries, international unions
    JEL: D71 F15 F55 H77 O57
    Date: 2017
  14. By: Anne Marie Jeannet
    Abstract: olitical disaffection has intensified in democratic societies and European countries have witnessed a slow but steady decline of political trust over the past decades. We argue that this is due to, in part, to sustained immigration and was exacerbated by the onset of the global financial crisis. To test this, we employ a multi-level research design using micro attitudinal data from 17 European countries (2002-14). Our findings show a strong connection between immigration to Europe and the growing distrust that European citizens have for their country’s political institutions. This study provides new insight into how trends in immigration and the economic conditions of the last decade have reshaped the relationship between citizens and politics in Europe. Finally, the future implications for sociological theorizing around political trust is discussed.
    Date: 2017–04
  15. By: BAHARAD, Eyal; BEN-YASHAR, Ruth; NITZAN, Shmuel
    Abstract: Under the unanimity rule, a single voter may alter a decision that is unanimously accepted by all other voters. Under the simple majority rule, the impact of such a voter diminishes. This paper examines the marginal effect of competence on the collective performance – the likelihood of reaching a correct decision. It is shown that under the unanimity rule (simple majority rule), adding an incompetent voter to the group is inferior (superior) to giving up an existing competent voter. The negative impact of an incompetent voter cannot (can) always be balanced by adding a competent one when the decision mechanism is the unanimity (simple majority) rule. Moreover, improving a single voter's competence may have a greater effect on the collective performance under the simple majority rule relative to the unanimity rule.
    Keywords: Unanimity rule, simple majority rule, voters' competence, collective performance
    Date: 2018–11
  16. By: Berg, Heléne (Dept. of Economics, Stockholm University)
    Abstract: Despite the key role played by political payoffs in theory, very little is known empirically about the types of payoffs that motivate politicians. The purpose of this paper is to bring light into this. I estimate causal effects of being elected in a local election on monetary returns. The claim for causality, I argue, can be made thanks to a research design where the income of some candidate who just barely won a seat is compared to that of some other candidate who was close to winning a seat for the same party, but ultimately did not. This research design is made possible thanks to a comprehensive, detailed data set covering all Swedish politicians who have run for office in the period 1991–2006. I establish that monetary returns are absent both in the short and long run. Instead, politicians seem to be motivated by non-monetary returns, and I show that being elected locally once (for exogenous reasons) can be an effective starting point for enjoying such payoffs.
    Keywords: Returns to politics; incumbency effects; regression discontinuity design
    JEL: C23 D72 J44
    Date: 2018–12–04
  17. By: Lidia Ceriani; Simona Scabrosetti; Francesco Scervini
    Abstract: According to the existing theoretical literature, there are several channels through which privatization of State-owned enterprises and assets may shape the distribution of income, either increasing or decreasing the level of inequality. Assessing the actual distributional impact of privatization becomes therefore an empirical matter. This paper is a first attempt to empirically investigate the relationship between privatization and income inequality through redistribution, focusing on the role of democratic institutions in developing countries. Using an unbalanced panel of lowand middle-countries in the period 1988-2008, we find that an increase in privatization revenue is negatively and significantly correlated with net-income inequality when democratic institutions are well consolidated. All the robustness checks we perform confirm this finding. Thus, our analysis seems to suggest that, in developing countries, policy makers's choice of implementing divestiture programs while democratizing at the same time may lead to an improvement in income equality.
    Keywords: Inequality, Democracy, Privatization, Developing countries
    Date: 2018–05
  18. By: Axel Dreher; Valentin F. Lang; B. Peter Rosendorff; James Raymond Vreeland
    Abstract: We show how major shareholders can exploit their power over international organizations to hide their foreign-policy interventions from domestic audiences. We argue that major powers exert influence bilaterally when domestic audiences view the intervention favorably. When domestic audiences are more skeptical of a target country, favors are granted via international organizations. We test this theory empirically by examining how the United States uses bilateral aid and IMF loans to buy other countries’ votes in the United Nations Security Council (UNSC). Introducing new data on voting behavior in the UNSC over the 1960-2015 period, our results show that states allied with the US receive more bilateral aid when voting in line with the United States in the UNSC, while concurring votes of states less allied with the US are rewarded with loans from the IMF. Temporary UNSC members that vote against the United States do not receive such perks.
    Keywords: United Nations Security Council, voting, aid, IMF
    JEL: O11 O19 F35
    Date: 2018
  19. By: Audinga Beltrunaite
    Abstract: This paper studies whether firms trade political contributions for public procurement contracts. Combining data on Lithuanian government tenders, corporate donors and firm characteristics, I examine how a ban on corporate contributions affects the awarding of procurement contracts to companies that donated in the past. Consistent with political favoritism, donors' probability of winning falls by five percentage points as compared to that of non-donor firms after the ban. Evidence on bidding and victory margins suggests that corporate donors might receive information on competing bids. I assess that tax payers save almost one percent of GDP thanks to the reform.
    Keywords: political contributions, public procurement, contributing firms, rent seeking
    Date: 2017–02

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