nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒03‒18
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Globalization and Protectionism: AMLO’s 2006 Presidential Run By Sebastian Bustos; Jose Ramon Morales Arilla
  2. Senegal: Presidential elections 2019 - The shining example of democratic transition immersed in muddy power-politics By Kohnert, Dirk; Marfaing, Laurence
  3. The Role of the Media in Shaping Attitudes Toward Corporate Tax Avoidance: Experimental Evidence from Ireland By Liam Kneafsey; Aidan Regan
  4. Is there a selection bias in roll call votes? Evidence from the European Parliament By Hix, Simon; Noury, Abdul; Roland, Gerard
  5. Demographic dynamics, value orientations and electoral behavior By Korotaev, Andrey (Коротаев, Андрей); Shulgin, Sergey (Шульгин, Сергей); Medvedev, Ilya (Медведев, Илья); Romanov, Dmitriy (Романов, Дмитрий); Efremov, Igor (Ефремов, Игорь); Zinkina, Yulia (Зинькина, Юлия)
  6. Foreign in influence and domestic policy: A survey By Toke S. Aidt, Facundo Albornoz, Esther Hauk; Facundo Albornoz; Esther Hauk
  7. The political economy of higher education finance: how information and design affect public preferences for tuition By Philipp Lergetporer; Ludger Wößmann
  8. A prospect-theory model of voter turnout By Oliver Herrmann; Richard Jong-A-Pin; Lambert Schoonbeek
  9. Misallocation of Talent and Human Capital: Political Economy Analysis By Gradstein, Mark
  10. Critically important: The heterogeneous effect of politics on trade By Julian Hinz; Elsa Leromain

  1. By: Sebastian Bustos (Center for International Development at Harvard University); Jose Ramon Morales Arilla (Center for International Development at Harvard University)
    Abstract: We study the effects of local tariff drops for Mexican exports to the US on the local electoral perfor- mance of Andrés Manuel López Obrador (AMLO) in Mexico’s 2006 presidential election. In an effort to appeal to his rural base, AMLO proposed to unilaterally retain tariff exemptions on imported corn and beans, which were scheduled to drop under NAFTA by the end of 2008. This elevated protectionism in the public agenda during the campaign. We find that local economic gains due to export tariff drops under NAFTA between 1994 and 2001 led to a drop in AMLO’s local vote share gains in 2006. These effects are contingent to the 2006 election, as similar effects on local vote for the left are not found in previous or later elections. Results are robust to controls for local grain growing and Chinese competition. We predict that AMLO would have been elected in 2006 had protectionism not been a salient electoral issue. Our findings suggest export access gains due to globalization undermine local political preferences over national protectionist platforms.
    Keywords: NAFTA, AMLO, Globalization, Protectionism
    JEL: F13 F55 D72
    Date: 2019–03
  2. By: Kohnert, Dirk; Marfaing, Laurence
    Abstract: Whereas Senegal has long been sold as a showcase of democracy in Africa, including peaceful political alternance, things apparently changed fundamentally with the Senegalese presidentials of 2019 that brought new configurations. One of the major issues was political transhumance that has been elevated to the rank of religion in defiance of morality. It threatened political stability and peace. In response, social networks of predominantly young activists, created in 2011 in the aftermath of the Arab Spring focused on grass-roots advocacy with the electorate on good governance and democracy. They proposed a break with a political system that they consider as neo-colonialist. Moreover, Senegal’s justice is frequently accused to be biased, and the servility of the Constitutional Council which is in the first place an electoral court has often been denounced.
    Keywords: Senegal,presidential elections,governance,political change, political transhumance,social networks,West Africa,WAEMU, ECOWAS , civic agency
    JEL: D72 D74 F54 N17 N37 N97 O17 P16 Z13
    Date: 2019–03–12
  3. By: Liam Kneafsey (Trinity College Dublin); Aidan Regan (University College Dublin)
    Abstract: This articles examines the role of the mass media in shoring up popular support for corporate tax avoidance, using the EU’s recent ruling against Apple Inc. in the case of Ireland. Using an original and novel survey experiment, we find that media frames play an important role in shaping attitudes toward Apple’s corporate tax avoidance, and attitudes towards whether the Irish state should challenge the EU ruling. We find that respondents exposed to treatments questioning the morality and fairness of Ireland’s facilitation of Apple tax avoidance are more likely to acknowledge the negative impact on Ireland’s EU neighbours. These results are largely robust to the inclusion of control variables for ideology, age, previous voting behaviour, and gender. These findings suggest that media frames are an important factor in shoring up popular support for those components of national growth regimes that are politically controversial, and play an important role in how business exercises its power over public policy. More broadly, our findings suggest that to understand popular support for national varieties of capitalism in Europe, we need to examine the role of the country-specific media.
    Keywords: Comparative political economy; media frames; corporate tax avoidance
    Date: 2019–02–15
  4. By: Hix, Simon; Noury, Abdul; Roland, Gerard
    Abstract: We examine the magnitude and significance of selection bias in roll call votes. Prior to 2009, all recorded (roll call) votes in the European Parliament had to be requested explicitly by European Political Groups. Since 2009, a roll call vote has been mandatory on all final legislative votes. We exploit that change in the rules and compare differences between final legislative votes, amendment votes and non-legislative votes before and after 2009, using a difference-in-differences approach with extensive controls. Using data from the Sixth (2004–2009) to Seventh (2009–2014) European Parliaments, we fail to find any large differences in voting cohesion for the main political groups. We find even less significance when we control for changes in parliamentary membership between those two periods. The results suggest that selection biases in the European Parliament associated with strategic choices are negligible.
    Keywords: roll call votes; European Parliament; party disclosure; natural experiment; difference in difference estimation
    JEL: D72 D78 P16 P48
    Date: 2018–03–10
  5. By: Korotaev, Andrey (Коротаев, Андрей) (The Russian Presidential Academy of National Economy and Public Administration); Shulgin, Sergey (Шульгин, Сергей) (The Russian Presidential Academy of National Economy and Public Administration); Medvedev, Ilya (Медведев, Илья) (The Russian Presidential Academy of National Economy and Public Administration); Romanov, Dmitriy (Романов, Дмитрий) (National Research University Higher School of Economics); Efremov, Igor (Ефремов, Игорь) (The Russian Presidential Academy of National Economy and Public Administration); Zinkina, Yulia (Зинькина, Юлия) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper shows the existence of a relationship between people's value preferences and their political behavior, as well as the relationship between the demographic characteristics of society and value preferences. The first part of the work presents an overview of work on the relationship of value systems with demographic factors and electoral behavior. The second part of the work describes the procedure of a sociological study of the relationship of value orientations and electoral behavior in the presidential elections of Russia in 2018, as well as electoral preferences in the period after the elections. In the third part of the work, an analysis is made of the connection of individual value measurements with demographic factors and electoral behavior, and electoral preferences in Russia.
    Keywords: demography, gender, age, value orientations, electoral behavior, electoral preferences, values of preservation, values of openness to change, values of caring for others, values of self-affirmation
    Date: 2019–03
  6. By: Toke S. Aidt, Facundo Albornoz, Esther Hauk; Facundo Albornoz; Esther Hauk
    Abstract: In an interconnected world, economic and political interests inevitably reach beyond national borders. Since policy choices generate external economic and political costs, foreign state and non-state actors have an interest in influencing policy actions in other sovereign countries to their advantage. Foreign influence is a strategic choice aimed at internalizing these externalities and takes many forms. We distinguish three broad types of intervention strategies, (i) voluntary agreement interventions between the intervening foreign power and the target country, (ii) policy interventions based on rewarding or sanctioning the target country to obtain a specific change in policy and (iii) institution interventions aimed at influencing the policy choice by changing the political institutions in the target country (with or without a civil war). We propose a unifying theoretical framework to understand when and which form of foreign influence is chosen and use it to organize and evaluate the new political economics literature on foreign influence along with work in cognate disciplines. Foreign intervention plays a more important role for a proper understanding of domestic policy choices, for institutional dynamics and for internal conflict than is commonly acknowledged in both empirical and theoretical research.
    Keywords: Foreign inuence, international agreements, institutions, aid, sanctions, conflict
    JEL: D7 D72 D74 F13 F23 F51 F53
    Date: 2019–03–14
  7. By: Philipp Lergetporer; Ludger Wößmann
    Abstract: Public preferences for charging tuition are important for determining higher education finance. To test whether public support for tuition depends on information and design, we devise several survey experiments in representative samples of the German electorate (N>19,500). The electorate is divided, with a slight plurality opposing tuition. Providing information on the university earnings premium raises support for tuition by 7 percentage points, turning the plurality in favor. The opposition-reducing effect persists two weeks after treatment. Information on fiscal costs and unequal access does not affect public preferences. Designing tuition as deferred income-contingent payments raises support by 16 percentage points, creating a strong majority favoring tuition. The same effect emerges when framed as loan payments. Support decreases with higher tuition levels and increases when targeted at non-EU students.
    Keywords: tuition, higher education, political economy, survey experiments, information, earnings premium, income-contingent loans, voting
    JEL: I22 H52 D72 D83
    Date: 2019
  8. By: Oliver Herrmann; Richard Jong-A-Pin; Lambert Schoonbeek
    Abstract: We incorporate prospect-theory preferences in a game-theoretic model to study voter turnout. We show that voter turnout is heavily affected by agents having subjective reference points with respect to the vote or abstain decision and their subjective probability weighting in the decision-making process. Using empirically based parameter values, we show that our model has lower prediction error than other game-theoretic models with standard expected-utility preferences. We also find that our model maintains desirable comparative statics effects and leads to higher turnout predictions in larger electorates.
    Keywords: voting behavior, Downsian paradox, prospect-theory preferences
    JEL: D72
    Date: 2019
  9. By: Gradstein, Mark
    Abstract: Mismatches in the labor market, specifically because of underrepresentation of various population groups, carry significant economic cost. In this paper we argue, using a simple analytical model, that an additional cost component is related to the effect of such underrepresentation on incentives to invest in human capital, which results in a mutual feedback relationship between the labor market and the skill acquisition market and may lead to economy's divergence. Further, under increasing returns to scale in human capital, it is shown that an initially advantaged group has an incentive to minimize the bias against the disadvantaged group, and that political enfranchisement is the means to achieve a commitment to such a policy. It is argued that this is consistent with empirical regularities.
    Date: 2019–03
  10. By: Julian Hinz; Elsa Leromain
    Abstract: There is strong empirical evidence showing that political relations have an impact on aggregate bilateral trade flows. In this paper, we show that the impact is heterogeneous across products, depending on product characteristics. Specifically, imported products used as intermediate inputs intensively may be more sensitive to adverse shocks. This is particularly relevant in the current context of increased international input linkages. We sketch a simple theoretical framework and test the mechanism in reduced-form. We implement a difference-in-differences approach with monthly trade flows and a novel dataset of diplomatic incidents. We find that a negative shock to political relations leads to a general decrease in trade flows, and that the response is larger for products in markets with low price gaps to alternative sourcing partners and high direct and indirect imported input use.
    Keywords: Trade frictions, political relations, dependence, input sourcing
    JEL: F14 F15 F51 F52
    Date: 2018–12

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