nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒12‒09
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Democracy, State Capacity and Public Finance By Easaw, Joshy; Leppälä, Samuli
  2. Vote buying in the US Congress By Matter, Ulrich; Roberti, Paolo; Slotwinski, Michaela
  3. Ethno-Regional Favoritism and the Political Economy of School Test Scores By Philip Verwimp
  4. Diversifying the Donor Pool: Did Seattle's Democracy Vouchers Program Reshape Participation in Municipal Campaign Finance? By McCabe, Brian J; Heerwig, Jennifer A.
  5. Power Sharing at the Local Level: Evidence on Opting-In for Non-Citizen Voting Rights By Stutzer, Alois; Slotwinski, Michaela
  6. Well-being, political decentralisation and governance quality in Europe By Rodríguez-Pose, Andrés; Tselios, Vassilis
  7. Economic, social, and institutional determinants of domestic conflict in fragile States By Syed Muhammad All-E-Raza Rizvi; Marie-Ange Veganzones-Varoudakis
  8. Voting contagion: Modeling and analysis of a century of U.S. presidential elections By Braha, Dan; de Aguiar, Marcus A. M.
  9. The Political Economy of Data Production By Kerner, Andrew; Crabtree, Charles
  10. Media competition, information provision and political participation:Evidence from French local newspapers and elections, 1944–2014 By Julia Cage

  1. By: Easaw, Joshy (Cardiff Business School); Leppälä, Samuli (Cardiff Business School)
    Abstract: The purpose of this paper is to consider the determinants of state capacity investments and public finance in societies with different intensities of democracy. Specifically, we consider the implications of political (dis)parity between the political parties as well as voter groups for state capacity investments, public goods provision, preferential tax policies between the elites and citizens, and the ability of the incumbent government to accrue political rents. The paper provides a unified framework to study the direct and indirect effects of democracy by combining state capacity investment and probabilistic voting. Paradoxically, while stronger electoral contestability leads to higher public good provision and lower political rents, it deteriorates the incumbent’s incentive to invest in state capacity. Similarly, when increased political inclusivity between the voters leads to higher public good provision and lower political rents, it will have a negative effect on state capacity. Conversely, if the effect of inclusivity on state capacity investment is positive, then public good provision will decline.
    Keywords: democracy, state-capacity investment, electoral bias, political inclusivity, political rents, public goods provision
    JEL: D72 H10
    Date: 2019–12
  2. By: Matter, Ulrich; Roberti, Paolo; Slotwinski, Michaela
    Abstract: We assess the influence of moneyed interests on legislative decisions. Our theory predicts that the vote outcome distribution and donation flows in a legislature feature a discontinuity at the approval threshold of bills if special interest groups are involved in vote buying. Testing the theoretical predictions based on two decades of roll-call voting in the U.S. House, we identify the link between narrowly passed bills and well-timed campaign contributions. Several pieces of evidence substantiate our main finding, suggesting that moneyed interests exert remarkably effective control over the passage of contested bills.
    Keywords: legislative voting,campaign finance,special interest groups,lobbying,forensic economics
    JEL: D72 D78
    Date: 2019
  3. By: Philip Verwimp
    Abstract: The northern provinces of Burundi have suffered from an inferior education system since independence. This paper shows that the current, northern-led regime has chosen a drastic way to reverse that subordination. The national test (Concours National) at the end of primary school is at the heart of the matter. Using the universe of individual test score data which can be used to construct a school-level panel and applying differencein-differences analysis, the paper shows strong improvements in test scores in northern versus southern schools since the ruling party won an absolute majority in the 2010 elections. Immediately after these elections, schools situated in very poor, rural areas in the north scored as high as schools in non-poor areas of the capital. The paper finds that increased success rates, improved mean test scores and decreased standard deviations are explained by the percent of votes at the municipality level obtained by the ruling party in the 2010 parliamentary elections. Controlling for school budget and cohort size variables does not change the results. The latter are interpreted in the political economy of education reform in Burundi and considered as a case of ethno-regional favoritism in Africa.
    Keywords: ethno-regional favoritism; school test scores; elections; Burundi
    Date: 2019–12
  4. By: McCabe, Brian J; Heerwig, Jennifer A.
    Abstract: In this paper, we evaluate whether an innovative new campaign finance program in Seattle, Washington shifted the composition of campaign donors in local elections. In 2015, voters in Seattle approved the creation of the Democracy Voucher program with the intent of broadening representation in the campaign finance system and expanding participation from marginalized communities. Every registered voter in Seattle was provided with four, twenty-five-dollar vouchers that they could, in turn, assign to the local candidate(s) of their choice. Through an analysis of the inaugural implementation of the program in 2017, we investigate whether this innovative public financing system increased participation, broadened involvement from underrepresented groups and led to a donor pool that was more representative of the electorate. Compared to cash donors in the municipal election, we report that voucher users are less likely to be high-income and more likely to come from poor neighborhoods. While older residents are over-represented among voucher users, there is little difference in the racial composition of cash donors and voucher users. Our analysis confirms that the Democracy Voucher program successfully moved the donor pool in a more egalitarian direction, although it remains demographically unrepresentative of the electorate. The lessons from Seattle’s inaugural implementation offer key insights for other municipalities considering public financing policies, and these lessons have the potential to reshape the national policy debate about the influence of political money.
    Date: 2018–05–16
  5. By: Stutzer, Alois (University of Basel); Slotwinski, Michaela (University of Basel)
    Abstract: The enfranchisement of foreigners is likely one of the most controversial frontiers of institutional change in developed democracies, which are experiencing an increasing number of non-citizen residents. We study the conditions under which citizens are willing to share power. To this end, we exploit the unique setting of the Swiss canton of Grisons, where municipalities are free to decide on the introduction of non-citizen voting rights at the local level (a so called opting-in regime). Consistent with the power dilution hypothesis, we find that enfranchisement is less likely the larger the share of resident foreigners. Moreover, municipalities with a large language/cultural minority are less likely to formally involve foreigners. In contrast, municipality mergers seem to act as an institutional catalyst, promoting democratic reforms. A supplementary panel analysis on electoral support for an opting-in regime in the canton of Zurich also backs the power dilution hypothesis, showing that a larger share of foreigners reduces support for a regime change.
    Keywords: non-citizen voting rights; opting-in; power sharing; democratization
    JEL: D72 D78 J15
    Date: 2019–11–13
  6. By: Rodríguez-Pose, Andrés; Tselios, Vassilis
    Abstract: European nations allocate public sector resources with the general aim of increasing the well-being and welfare of their citizens through a fair and efficient distribution of these public goods and services. However, ‘who’ delivers these goods and services and ‘how well’ they are delivered are essential in determining outcomes in terms of well-being. Drawing on data from the European Social Survey database, this paper uses Amartya Sen’s social welfare index framework – accounting for the trade-off between the maximization of public sector resources and an equitable distribution of these resources – to examine the influence of political decentralisation (‘who’ delivers the resources) and whether this influence is moderated by governance quality (‘how well’ they are delivered) on individual subjective well-being. The findings of the econometric analysis reveal that decentralisation does not always lead to higher well-being, as the benefits of political decentralisation are highly mediated by the quality of national governance. In countries with high governance quality, political decentralisation results in a greater satisfaction with health provision, while in lower quality governance countries, a more decentralized government can increase the overall satisfaction with life, the economy, government, democracy and the provision of education, but not necessarily with health-related services.
    Keywords: well-being; political decentralisation; quality of governance; Europe; European Social Survey
    JEL: H11 H70 I31
    Date: 2019–01–02
  7. By: Syed Muhammad All-E-Raza Rizvi (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Marie-Ange Veganzones-Varoudakis (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this article, we use Fixed Effect Poisson Regression (FEPR) with robust standard errors, to study the economic, social, and institutional determinants of internal conflict in 58 fragile states over the period 2004 to 2017. We show that effective institutions (measured by judicial effectiveness) and higher incomes can help reduce conflict in these countries. By contrast, democracy does not seem to mitigate violence, with democratic experiences generally showing an increase in conflicts in fragile countries. It also appears that human capacity development does not contribute to conflict reduction. This implies that fragile states must first improve the social, economic, and institutional conditions of their population before they can reap the benefits of political reforms and of education. The same is true for economic reforms in the context of globalization, which also do not seem to help reduce violence in fragile countries.
    Keywords: Conflict,Fragile States,Economic Reforms,Education,Democracy,Institutions
    Date: 2019–10–31
  8. By: Braha, Dan; de Aguiar, Marcus A. M.
    Abstract: Social influence plays an important role in human behavior and decisions. Sources of influence can be divided as external, which are independent of social context, or as originating from peers, such as family and friends. An important question is how to disentangle the social contagion by peers from external influences. While a variety of experimental and observational studies provided insight into this problem, identifying the extent of contagion based on large-scale observational data with an unknown network structure remains largely unexplored. By bridging the gap between the large-scale complex systems perspective of collective human dynamics and the detailed approach of social sciences, we present a parsimonious model of social influence, and apply it to a central topic in political science--elections and voting behavior. We provide an analytical expression of the county vote-share distribution, which is in excellent agreement with almost a century of observed U.S. presidential election data. Analyzing the social influence topography over this period reveals an abrupt phase transition from low to high levels of social contagion, and robust differences among regions. These results suggest that social contagion effects are becoming more instrumental in shaping large-scale collective political behavior, with implications on democratic electoral processes and policies.
    Date: 2018–01–02
  9. By: Kerner, Andrew; Crabtree, Charles
    Abstract: Cross-national macroeconomic statistics are nearly ubiquitous in international relations and comparative politics research. While we know that these data can only be measured with error, our reliance on them implies a belief that those errors are random, or, at a minimum, unrelated to the political phenomena we use them to understand. But that is implausible. Measuring the economy is largely a state function, and the political-economic backdrop against which it occurs inherently shapes it. The implicit belief that the politics of data production are inconsequential to political science research should be scrutinized. We examine this belief using a newly available dataset of ex post revisions to World Development Indicators data, with a particular focus on GDP growth statistics. We find that revisions to these data reveal a form of measurement error that is both consequential—simple political economy relationships vary substantially depending on which version of the data is used—and systematic. We focus particularly on the IMF’s role in the political economy of data production, but our analysis reveals other political factors that inform the scale and direction of ex post revisions.
    Date: 2018–01–17
  10. By: Julia Cage (Département d'économie)
    Abstract: This paper investigates the impact of increased media competition on the quantity and quality of news provided and, ultimately, on political participation. I build a new county-level panel dataset of local newspaper presence, newspapers' number of journalists, costs and revenues and political turnout in France, from 1944 to 2014. I estimate the effect of newspaper entry by comparing counties that experience entry to similar counties in the same years that do not. Both sets of counties exhibit similar trends prior to entry, but those with entry experience substantial declines in the average number of journalists. An increased number of newspapers is also associated with fewer articles and less hard news provision. Newspaper entry, and the associated decline in information provision, is ultimately found to decrease voter turnout at local elections. Exploiting the long time span covered by my data, I discuss a number of mechanisms that may drive these empirical findings. First, I examine the relationship between increased competition and media capture in the aftermath of WW2, when newspapers were biased and the advertising market was underdeveloped. I then show that in the recent period the effects are stronger in counties with more homogeneous populations, as predicted by a vertical product differentiation framework, whereas there is little impact in counties with more heterogeneous populations.
    Keywords: Media Competition; Newspaper Content; Size of the newsroom; Hard News; Soft News; Political Participation; Media Capture; Governance
    JEL: D72 L11 L13 L82
    Date: 2019–11

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