nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒06‒17
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Ethnic Identities, Public Spending and Political Regimes By Sugata Ghosh; Anirban Mitra
  2. A Theory of Clientelistic Politics versus Programmatic Politics By Pranab Bardhan; Dilip Mookherjee
  3. Information Aggregation with Runoff Voting By Nikolas Tsakas; Dimitrios Xefteris
  4. Coming Out in America: AIDS, Politics, and Cultural Change By Fernández, Raquel; Parsa, Sahar; Viarengo, Martina
  5. What Happens When Voting Rules Change?The Case of New Zealand By J. Stephen Ferris
  6. Hurricanes, Climate Change Policies and Electoral Accountability By Gagliarducci, Stefano; Paserman, M. Daniele; Patacchini, Eleonora
  7. Brothers or Invaders? How Crises-Driven Migrants Shape Voting Behavior By Sandra Rozo; Juan Vargas
  8. Factions, Local Accountability, and Long-Term Development: Theory and Evidence By Hanming Fang; Linke Hou; Mingxing Liu; Lixin Colin Xu; Pengfei Zhang
  10. Democracy and Governance By Riccardo Pelizzo
  11. Socioeconomic Correlates of Political Polarization: Evidence from English Counties By Daryna Grechyna

  1. By: Sugata Ghosh; Anirban Mitra
    Abstract: Do democracies discriminate less against minorities as compared to non-democracies? How does the dominance of an ethnic group affect discrimination under various political regimes? We build a theory which tries to answer such questions. In our model, political leaders (democratically elected or not) decide on the allocation of spending on different types of public goods: a general public good and an ethnically-targetable public good which benefits the majority ethnic group while imposing a cost on the other minorities. We show that, under democracy, lower ethnic dominance leads to greater provision of the general public good while higher dominance implies higher provision of the ethnically-targetable good. Interestingly, the opposite relation obtains under dictatorship. This implies that political regime changes can favour or disfavour minorities based on the ambient level of ethnic dominance. Several historical events involving regime changes can be analysed within our framework and are consistent with our results.
    Keywords: Ethnic identities; Discrimination; Public spending; Political regimes
    JEL: D72 D74 H40
    Date: 2019–06
  2. By: Pranab Bardhan (University of California Berkeley); Dilip Mookherjee (Boston University)
    Abstract: We provide a theoretical analysis of the distinction between clientelistic and programmatic politics and resulting consequences for policy choices and political competition. Clientelism arises when elected officials exercise ex post discretion over delivery of government transfers to citizens in an informal sector, and condition this on political support. Two party Downsian competition features ‘programmatic’ equilibria involving policy convergence and close elections if parties are equally popular ex ante. If the informal sector is large enough, these equilibria are locally unstable, and multiple asymmetric ‘clientelistic’ locally stable equilibria arise. Clientelistic equilibria involve policy divergence, lower supply of public goods, and higher inequality in vote shares. Comparative statics and welfare properties of the two classes of equilibria are related to existing empirical evidence.
    Date: 2018–08
  3. By: Nikolas Tsakas; Dimitrios Xefteris
    Abstract: A majority of independent voters wants to choose the alternative that better matches the state of the world, but may disagree on its identity due to private information. When we have an arbitrary number of alternatives and also sophisticated partisan voters exist in the electorate, the election of the correct alternative is a real challenge. Building upon McLennan (1998) and Barelli et al. (2017) we show that runoff voting -one of the most intuitive electoral systems- achieves asymptotically full information equivalence. That is, when the society is large, it can lead to the election of the correct alternative under fairly general assumptions regarding the information structure and partisans' preferences.
    Keywords: runoff voting; information aggregation; partisan voters; Condorcet jury theorem
    JEL: D71 D72
    Date: 2019–05
  4. By: Fernández, Raquel; Parsa, Sahar; Viarengo, Martina
    Abstract: The last few decades witnessed a dramatic change in public opinion towards gay people. This paper studies the hypothesis that the AIDS epidemic was a shock that changed the incentive to "come out" and that the ensuing process of mobilization and endogenous political process led to cultural transformation. We show that the process of change was discontinuous over time and present suggestive evidence that the 1992 presidential election followed by the "don't ask, don't tell" debate led to a change in attitudes. Using a difference-in-difference empirical strategy, we find that, in accordance with our hypothesis, the change in opinion was greater in states with higher AIDS rates. Our analysis suggests that if individuals in low-AIDS states had experienced the same average AIDS rate as a high-AIDS state, the change in their approval rate from the '70s to the '90s would have been 50 percent greater.
    Keywords: AIDS epidemic; Cultural change; LGBT attitudes; Party politics; presidential elections; Public Opinion
    JEL: J15 P16 Z13
    Date: 2019–05
  5. By: J. Stephen Ferris (Department of Economics, Carleton University)
    Abstract: This paper examines the impact of New Zealand’s 1996 adoption of a mixed member proportional (MMP) voting scheme on representation in the legislature, voter turnout, vote volatility and the likelihood of an incumbent party winning re-election. I then consider whether MMP has had any negative consequences for the effectiveness of government policy in relation to fiscal accountability and countercyclical intervention. The data used in the analysis begins from the formation of the party system in New Zealand (in 1890) and extends through the adoption of MMP to the present (2017). The data set covers 42 elections: 34 before 1996 and 8 after.
    Keywords: Institutional change, Mixed Member Proportional Voting, Vote turnout, Vote volatilities, Winning margins, New Zealand
    JEL: D72 C41 C24
    Date: 2019–06–05
  6. By: Gagliarducci, Stefano; Paserman, M. Daniele; Patacchini, Eleonora
    Abstract: This paper studies how politicians and voters respond to new information on the threats of climate change. Using data on the universe of federal disaster declarations between 1989 and 2014, we document that congress members from districts hit by a hurricane are more likely to support bills promoting more environmental regulation and control in the year after the disaster. The response to hurricanes does not seem to be driven by logrolling behavior or lobbysts' pressure. The change in legislative agenda is persistent over time, and it is associated with an electoral penalty in the following elections. The response is mainly promoted by representatives in safe districts, those with more experience, and those with strong pro-environment records. Our evidence thus reveals that natural disasters may trigger a permanent change in politicians' beliefs, but only those with a sufficient electoral strength or with strong ideologies are willing to engage in promoting policies with short-run costs and long-run benefits.
    Keywords: hurricanes; legislative activity; U.S. Congress
    JEL: D70 D72 H50 Q54
    Date: 2019–05
  7. By: Sandra Rozo (University of Southern California); Juan Vargas (Universidad del Rosario)
    Abstract: Can voter’s negative attitudes toward immigration be explained by self-interest or sociotropic motives? Self-interested voters care about their personal economic circumstances. Sociotropic voters display in-group bias and perceive migrants as threats to their culture. We study the voting effects of forced internal and international migration in Colombia and exploit the disproportionate flows of migrants to municipalities with early settlements of individuals from their origin locations. In line with the sociotropic hypothesis, we find that only international migration inflows increase political participation and shift votes from left- to right-wing ideologies. These results are not accounted for by the observed changes caused by migrants in socioeconomic variables.
    Keywords: Colombia; Economic Development, Political Development, Demographic; Socioeconomic
    JEL: D72 F2 O15 R23
    Date: 2019–06
  8. By: Hanming Fang (Department of Economics, University of Pennsylvania); Linke Hou (Shandong University); Mingxing Liu (Peking University); Lixin Colin Xu (World Bank); Pengfei Zhang (Peking University)
    Abstract: We develop a theoretical model of how factional affiliation and local accountability can shape the policy choices of local officials who are concerned about political survivals, and subsequently affect the long-term local development. We provide empirical evidence in support of the theoretical predictions using county-level variations in development performance in Fujian Province in China. When the Communist armies took over Fujian Province from the Nationalist control circa 1949, communist cadres from two different army factions were assigned as county leaders. For decades the Fujian Provincial Standing Committee of the Communist Party was dominated by members from one particular faction, which we refer to as the strong faction. Counties also differed in terms of whether a local guerrilla presence had existed prior to the Communist takeover. We argue that county leaders from the strong faction were less likely to pursue policies friendly to local development because their political survival more heavily relied on their loyalty to the provincial leader than on the grassroots support from local residents. By contrast, the political survival of county leaders from the weak faction largely depended on local grassroots support, which they could best secure if they focused on local development. In addition, a guerrilla presence in a county further improved development performance either by intensifying the local accountability of the county leader, or by better facilitating the provision of local public goods beneficial to development. We find consistent and robust evidence supporting these assumptions. Being affiliated with weak factions and having local accountability are both associated with sizable long-term benefits that are evident in terms of a county’s growth and level of private-sector development, its citizens’ education levels, and their survival rates during the Great Chinese Famine. We also find that being affiliated with the strong faction and adopting pro-local policies are associated with higher likelihood of a local leader’s political survival.
    Keywords: Local Accountability; Factional Politics; Political Survival; Development Performance; Famine
    JEL: O1 O43 H70 D72
    Date: 2019–05–29
  9. By: Bohn, Henning; Lopez-Velasco, Armando R
    Abstract: First generation immigrants to the United States have higher fertility rates than natives. This paper analyzes to what extent this factor provides political support for immigration, using an overlapping generation model with production and capital accumulation. In this setting, immigration represents a dynamic trade-off for native workers as more immigrants decrease current wages but increase the future return on their savings. We find that immigrant fertility has surprisingly strong effects on voter incentives, especially when there is persistence in the political process. If fertility rates are sufficiently high, native workers support immigration. Persistence, either due to inertia induced by frictions in the legal system or through expectational linkages, significantly magnifies the effects. Entry of immigrants with high fertility has redistributive impacts across generations similar to pay-as-you-go social security: initial generations are net winners, whereas later generations are net losers.
    Keywords: Immigration, Political Economy Model, Overlapping Generations, Immigrant Fertility Rates, Intergenerational Redistribution, Economic Theory, Economics
    Date: 2019–07–01
  10. By: Riccardo Pelizzo (Nazarbayev University, Astana, Kazakhstan)
    Abstract: The purpose of the paper is to show that the nature of the relationship between governance and democracy varies depending on how the two terms (of a political discourse) are defined, that when the definition of one term encompasses distinctive features of the other we find that governance and democracy are not just mutually reinforcing but even overlapping, that only when we distinguish on theoretical ground governance from democracy we create the basis for analyzing their relationship on empirical grounds exactly as Fukuyama had suggested.
    Keywords: government, governance, good governance, democracy
    JEL: D02 D72 H00 H11 H89 O00 O10 O43 O55
    Date: 2018–01
  11. By: Daryna Grechyna (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: This paper estimates political polarization in English counties during 1991–2007, based on the aggregated individual data from the British Household Panel Survey and using three variants of the political polarization measure. It analyzes the socioeconomic determinants of political polarization, using the indicators computed from the same survey. The results suggest that the statistical properties of three different polarization measures are similar, though there is some variation in the levels of polarization related to different policy statements. Greater income inequality, greater average age of county residents, greater share of employed full time, and lower share of natives are associated with greater political polarization in English counties. These findings shed some light on the microeconomic foundations of political polarization.
    Keywords: political polarization; income inequality; social inequality; survey data.
    JEL: D31 D63 D72 O15
    Date: 2019–06–11

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