nep-pol New Economics Papers
on Positive Political Economics
Issue of 2020‒01‒13
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Moved to Vote: The Long-Run Effects of Neighborhoods on Political Participation By Eric Chyn; Kareem Haggag
  2. Politics, marketing and social media in the 2018 local elections in Iceland By Birgir Guðmundsson; Vera Kristín Kristjánsdóttir; Hafdís Björg Hjálmarsdóttir
  3. Climate Policy and Inequality in Two-Dimensional Political Competition By Waldemar Marz
  4. Political Fragmentation & Economic Growth in U.S. Metropolitan Areas By Goodman, Christopher B
  5. Helping Friends or Influencing Foes: Electoral and Policy Effects of Campaign Finance Contributions By Schnakenberg, Keith; Turner, Ian R
  6. Do changes in material circumstances drive support for populist radical parties? Panel data evidence from The Netherlands during the Great Recession, 2007–2015 By Gidron, Noam; Mijs, Jonathan Jan Benjamin
  7. Low-wage import competition and populist backlash: The case of Italy By Barone, Guglielmo; Kreuter, Helena
  8. Judicial Favoritism of Politicians: Evidence from Small Claims Court By Andre Assumpcao; Julio Trecenti
  9. Exit, Voice and Political Change: Evidence from Swedish Mass Migration to the United States By Karadja, Mounir; Prawitz, Erik
  10. Macroeconomic effects of political risk shocks By Hacioglu Hoke, Sinem
  11. The Politics of Correctional Privatization in the United States By Burkhardt, Brett

  1. By: Eric Chyn; Kareem Haggag
    Abstract: How does one's childhood neighborhood shape political engagement later in life? We leverage a natural experiment that moved children out of disadvantaged neighborhoods to study effects on their voting behavior more than a decade later. Using linked administrative data, we find that children who were displaced by public housing demolitions and moved using housing vouchers are 12 percent (3.3 percentage points) more likely to vote in adulthood, relative to their nondisplaced peers. We argue that this result is unlikely to be driven by changes in incarceration or in their parents' outcomes, but rather by improvements in education and labor market outcomes, and perhaps by socialization. These results suggest that, in addition to reducing economic inequality, housing assistance programs that improve one's childhood neighborhood may be a useful tool in reducing inequality in political participation.
    Keywords: political engagement, disadvantaged neighborhood, public housing demolitions, incarceration, Inequality
    JEL: D72 H75 I38 J13 R23
    Date: 2019–12
  2. By: Birgir Guðmundsson (Akureyri University); Vera Kristín Kristjánsdóttir (University of Akureyri); Hafdís Björg Hjálmarsdóttir (Akureyri University)
    Abstract: The importance of marketing techniques in political campaigning has increased as communicating politics has become more complex in a highly fragmented media environment. With different media logics interacting in a hybrid media system political marketing methods through social media have drawn considerable attention and even been seen to pose a threat to democratic processes. This paper looks at the extent and nature of the use of marketing techniques in the 2018 municipal elections in Iceland, by using a mixed methods approach. The findings of a candidate survey and interviews with campaign managers suggest that the methods used are by and large a technical extension of previous methods and not qualitatively different from traditional electioneering. Both social media and traditional media are important marketing vehicles, but the importance of social media clearly on the rise. However, in lager communities in the capital region there is a higher degree of professionalism than in other parts of the country and the size of municipality is important, while the type of party or age of candidates is not.
    Keywords: Political marketing, micro targeting, social media, traditional media, hybrid media system.
    Date: 2019–10
  3. By: Waldemar Marz
    Abstract: This paper examines how income inequality can affect the polarization of heterogeneous party platforms on climate policy (here: carbon tax). The implied consequences for the uncertainty of climate policy can be relevant for risk-averse investors in "green" technologies. Households are heterogeneous with respect to income and preferences for environmentalism and preferred redistribution. A static gametheoretic model of two-dimensional political competition on a carbon tax (with distributional implications) and an income tax is combined with a model of a carbonintensive economy. For a higher inequality of pre-tax income and/or a higher salience of the issue of redistribution, polarization of the parties’ carbon tax proposals in the equilibrium can increase - even if the income tax is used to counteract the increase in income inequality. This result does not depend on the progressivity of the carbon-tax revenue recycling mechanism.
    Keywords: Climate policy, inequality, political economy, multidimensional political competition
    JEL: H23 P16 Q52 Q54
    Date: 2019
  4. By: Goodman, Christopher B (Northern Illinois University)
    Abstract: This paper analyzes the impact of local political fragmentation on long-run population, employment, and per capita money income growth in 314 U.S. metropolitan areas. The results suggest a positive relationship between fragmentation and long-run population growth; however, the type of fragmentation matters. Local government fragmentation in both the horizontal (cities) and vertical (special districts) are important. The results do not generalize to long-run employment or per capita money income growth. These findings partially support the hypothesis that governmental fragmentation can enhance local economic growth; however, taking into account the local context in the measurement of local political structure is important.
    Date: 2019–06–06
  5. By: Schnakenberg, Keith; Turner, Ian R (Yale University)
    Abstract: Campaign finance contributions may influence policy by affecting elections or influencing the choices of politicians once in office. To study the trade-offs between these two paths to influence, we use a game in which contributions may affect electoral outcomes and signal policy-relevant information to politicians. In the model, a campaign donor and two politicians each possess private information correlated with a policy-relevant state of the world. The donor may allocate his budget to either an ally candidate who has relatively similar preferences or a moderate candidate whose preferences are relatively divergent from the donor's preferred policy. Contributions that increase the likelihood of the moderate being elected can signal good news about the donor's preferred policy and influence the moderate's policy choice. However, when the electoral effect of contributions is too small to demand sufficiently high costs to deter imitation by groups with negative information, this informational effect breaks down.
    Date: 2019–05–11
  6. By: Gidron, Noam; Mijs, Jonathan Jan Benjamin (London School of Economics and Political Science)
    Abstract: Political developments since the 2008 financial crisis have sparked renewed interest in the electoral implications of economic downturns. Research describes a correlation between adverse economic conditions and support for radical parties campaigning on the populist promise to retake the country from a corrupt elite. But does the success of radical parties following economic crises rely on people who are directly affected? To answer this question, we examine whether individual-level changes in economic circumstances drive support for radical parties across the ideological divide. Analyzing eight waves of panel data collected in The Netherlands, before, during, and after the Great Recession (2007–2015), we demonstrate that people who experienced an income loss became more supportive of the radical left but not of the radical right. Looking at these parties’ core concerns, we find that income loss increased support for income redistribution championed by the radical left, but less so for the anti-immigration policies championed by the radical right. Our study establishes more directly than extant research the micro-foundations of support for radical parties across the ideological divide.
    Date: 2019–04–17
  7. By: Barone, Guglielmo; Kreuter, Helena
    Abstract: This paper empirically studies the role of trade globalization in shifting the electoral base towards populism. We proxy trade shock with swiftly rising import competition from China and compare the voting pattern at the parliamentary national elections from 1992 to 2013 in about 8,000 Italian municipalities differently exposed to the trade shock. We instrument import competition with Chinese export flows to other high-income countries and estimate the model in first differences. Our results indicate that trade globalization increases support for populist parties, besides fostering a tendency to cast invalid votes or even abstain from voting. To rationalize these findings, we offer evidence that import competition worsens labor market conditions - higher unemployment, lower income and durable consumption - and increases inequality. Finally, we point out that public expenditure plays a role in mitigating the political consequences of the trade shock, arguably because it alleviates economic distress.
    Keywords: trade globalization,populism,inequality,Handelsglobalisierung,Populismus,Einkommensgefälle
    JEL: D72 F60
    Date: 2019
  8. By: Andre Assumpcao; Julio Trecenti
    Abstract: Multiple studies have documented racial, gender, political ideology, or ethnical biases in comparative judicial systems. Supplementing this literature, we investigate whether judges rule cases differently when one of the litigants is a politician. We suggest a theory of power collusion, according to which judges might use rulings to buy cooperation or threaten members of the other branches of government. We test this theory using a sample of small claims cases in the state of S\~ao Paulo, Brazil, where no collusion should exist. The results show a negative bias of 3.7 percentage points against litigant politicians, indicating that judges punish, rather than favor, politicians in court. This punishment in low-salience cases serves as a warning sign for politicians not to cross the judiciary when exercising checks and balances, suggesting yet another barrier to judicial independence in development settings.
    Date: 2020–01
  9. By: Karadja, Mounir; Prawitz, Erik (Research Institute of Industrial Economics)
    Abstract: We study the political effects of mass emigration to the United States in the nineteenth century using data from Sweden. To instrument for total emigration over several decades, we exploit severe local frost shocks that sparked an initial wave of emigration, interacted with within-country travel costs. Our estimates show that emigration substantially increased the local demand for political change, as measured by labor movement membership, strike participation, and voting. Emigration also led to de facto political change, increasing welfare expenditures as well as the likelihood of adopting more inclusive political institutions.
    Date: 2019–09–05
  10. By: Hacioglu Hoke, Sinem (Bank of England and Data Analytics for Finance and Macro (KCL))
    Abstract: We investigate the macroeconomic effects of political risk in an information-rich SVAR. Using an external instrument based on an index of US partisan conflict for identification, we find that reduced political risk has expansionary impact: it is immediately priced into stock prices; increases firms’ credit availability, employment and investments while households invest and consume more — ultimately output rises. As an important driver of economic dynamics in medium to long term, the shock create an aggregate supply effect where output growth and inflation move in opposite directions, and generates a trade-off between inflation stabilization and output growth during turbulent periods. Key words: political risk shocks, partisan conflict, identification with external instruments.
    Keywords: Political; Risk; Shocks
    JEL: C36 E03
    Date: 2019–12–20
  11. By: Burkhardt, Brett (Oregon State University)
    Abstract: Research Summary: Private correctional firms are political actors. They work to create favorable conditions to market their services. At the same time, they are constrained by external political forces, including political parties, social movements, and public opinion. This article reviews what we know about the reciprocal relationship between the private corrections industry and politics. Policy Implications: The review of extant research yields several implications for practitioners and policymakers. First, correctional privatization is not uniformly accepted, a fact that presents challenges for the industry and opportunities for critics. Second, punitive policies that appear beneficial to industry (particularly, those related to tough immigration policy) may in fact pose real reputational risks. Third, new forms of privatization—namely, social impact bonds—may prove more tolerable to the general public. Finally, consideration of political activity by private industry should not distract from political activity by public sector actors (e.g., prison guard unions).
    Date: 2019–09–04

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