nep-pol New Economics Papers
on Positive Political Economics
Issue of 2020‒09‒07
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Effects of Social Capital on Government Performance and Turnover: Theory and Evidence from Italian Municipalities By Lockwood, Ben; Porcelli, Francesco; Redoano, Michela; Bracco, Emanuele; Liberini, Federica; Sgroi, Daniel
  2. The Employment Effects of Ethnic Politics By Francesco Amodio; Giorgio Chiovelli; Sebastian Hohmann
  3. Watchdog or loyal servant? Political media bias in US newscasts By Bernhardt, Lea; Dewenter, Ralf; Thomas, Tobias
  4. Polls and Elections: Strategic Respondents and Turnout Implications By Christina Luxen
  5. Economic Shocks and Populism: The Political Implications of Reference-Dependent Preferences By Fausto Panunzi; Nicola Pavoni; Guido Tabellini
  6. Reversal of Fortune for Political Incumbents after Oil Shocks By Arezki,Rabah; Djankov,Simeon; Nguyen,Ha Minh; Yotzov,Ivan Victorov
  7. Trade in Trash: A Political Economy Approach By James H. Cassing; Ngo Van Long
  8. Who Voted for Trump? Populism and Social Capital By Paola Giuliano; Romain Wacziarg
  9. The Spillover of Anti-Immigration Politics to the Schoolyard By Bracco, Emanuele; De Paola, Maria; Green, Colin P.; Scoppa, Vincenzo
  10. Does Holding Elections during a Covid-19 Pandemic Put the Lives of Politicians at Risk? By Laurent Bach; Arthur Guillouzouic; Clément Malgouyres
  11. Does Vote Trading Improve Welfare? By Alessandra Casella; Antonin Macé

  1. By: Lockwood, Ben (University of Warwick); Porcelli, Francesco (Universit`a di Bari); Redoano, Michela (University of Warwic); Bracco, Emanuele (Universit`a di Verona); Liberini, Federica (University of Bath); Sgroi, Daniel (University of Warwick)
    Abstract: This paper makes three contributions. First, it presents a theoretical analysis of how both the civic preference and information aspects of social capital impact on government performance and turnover, employing a political agency model with both moral hazard and adverse selection. Second, it presents novel measures of both local government performance and on social capital at the Italian municipality level, using administrative data and an online survey respectively. Third, empirical results show that higher social capital improves government performance, especially in the first term of office, but also increases turnover of incumbent mayors, as predicted by the theory. The voting rule predicted by the theory has the feature that the level effect of social capital on the incumbent vote share is negative, but the interaction between social capital and performance is positive. Our empirical results also support this prediction.
    Keywords: Social Capital ; Voting ; Elections ; Government Efficiency JEL codes: H41 ; H72 ; D72
    Date: 2020
  2. By: Francesco Amodio (McGill University, CIREQ); Giorgio Chiovelli (Universidad de Montevideo); Sebastian Hohmann (Stockholm School of Economics SITE)
    Abstract: This paper studies the labor market consequences of ethnic politics in African democracies. We combine geo-referenced data from 15 countries, 32 parliamentary elections, 62 political parties, 243 ethnic groups, 2,200 electoral constituencies, and 400,000 individuals. We implement a regression discontinuity design that compares individuals from ethnicities connected to parties at the margin of electing a local representative in the national parliament. We find that having a local ethnic politician in parliament increases the likelihood of being employed by 2-3 percentage points. We hypothesize that this effect originates from strategic interactions between ethnic politicians and traditional leaders, the latter retaining the power to allocate land and agricultural jobs in exchange for votes. The available evidence supports this hypothesis. First, the employment effect is concentrated in the historical homelands of ethnicities with strong pre-colonial institutions. Second, individuals from connected ethnicities are more likely to be employed in agriculture, and in those countries where customary land tenure is officially recognized by national legislation. Third, they are also more likely to identify traditional leaders as partisan, and as being mainly responsible for the allocation of land. Evidence shows that ethnic politics shapes the distribution of productive resources across sectors and ethnic groups.
    Keywords: ethnic politics, employment, democracy, traditional leaders, Africa
    JEL: J15 J70 O10 P26 Q15
    Date: 2019–12
  3. By: Bernhardt, Lea; Dewenter, Ralf; Thomas, Tobias
    Abstract: We investigate if four leading, electronic news gathering organizations in the US - ABC News, CBS News, FOX News, and NBC News - fulfill their role as the fourth estate in the US democracy. Our analysis, using the Political Coverage Index (PCI) introduced by Dewenter et al (2020), is based on the tonality of their political coverage using 815,000 human-coded news items from 2001 through 2012. For our econometric analysis, we use panel regressions with media and time fixed effects. To account for endogeneity, we cut time spans around national elections out of our data. In the remaining data, elections can be seen as a purely exogenous event. Focusing on the entire media set, we find robust empirical results for an anti-government bias in media reporting: Under Republican presidents, political coverage tends to be more liberal, whereas it tends to be more conservative if the president is a Democrat. However, when focusing on each single news organization, interesting differences emerge: For CBS News and NBC News, we find robust empirical evidence of anti-government-bias. In contrast, FOX News is always much more critical of Democrats than of Republicans. Hence, FOX News can be seen as a more loyal servant to one party rather than acting as the fourth estate. In addition, we find no evidence that ABC News significantly changes its position depending on the presidency. Although descriptive statistics show a certain tendency toward government-critical reporting by ABC News, the variation is not statistically significant.
    Keywords: Political Coverage Index,government bias,tonality,media capture,US newscasts
    JEL: C43 D72 L82
    Date: 2020
  4. By: Christina Luxen
    Abstract: This paper studies the effect of pre-election polls on the participation decision of citizens in a large, two-candidate election, and the resulting incentives for the poll participants. Citizens have private values and voting is costly and instrumental. The environment is ex ante symmetric and features aggregate uncertainty about the distribution of preferences. Citizens base their participation decision on their own preferences and on the information provided in the poll. If all participants answer the poll truthfully, the underdog effect implies that the supporters of the trailing candidate turn out at higher rates than the supporters of the leader of the poll. This effect yields incentives for the poll participants to misrepresent their preferences to encourage the voters who have the same preferences to turn out. If poll participants are strategic, however, there does not exist an equilibrium in which the poll conveys any information. Thus, in the limit, the majority candidate wins the election almost surely, regardless of voters' posterior beliefs.
    Keywords: Costly voting, Polls, Aggregate Uncertainty, Underdog Effect
    JEL: D72 D83
    Date: 2020–08
  5. By: Fausto Panunzi; Nicola Pavoni; Guido Tabellini
    Abstract: This paper studies electoral competition over redistributive taxes between a safe incumbent and a risky opponent. As in prospect theory, economically disappointed voters become risk lovers, and hence are intrinsically attracted by the more risky candidate. We show that, after a large adverse economic shock, the equilibrium can display policy divergence: the more risky candidate proposes lower taxes and is supported by a coalition of very rich and very disappointed voters, while the safe candidate proposes higher taxes. This can explain why new populist parties are often supported by economically dissatisfied voters and yet they run on economic policy platforms of low redistribution. We show that survey data on the German SOEP are consistent with our theoretical predictions on voters’ behavior.
    Date: 2020
  6. By: Arezki,Rabah; Djankov,Simeon; Nguyen,Ha Minh; Yotzov,Ivan Victorov
    Abstract: This paper explores the effect of oil shocks on electoral outcomes. Using a new polling and election data set for 207 elections across 50 democracies, the paper shows that oil price increases systematically lower the odds of reelection for incumbents. The analysis verifies that these shocks -- which reduce consumption growth -- are associated with worsening performance for incumbents in the runup to reelection and a reversal in the leaning of the political party in power post-election.
    Keywords: International Trade and Trade Rules,Natural Disasters,Primary Metals,Employment and Unemployment,Inflation
    Date: 2020–06–22
  7. By: James H. Cassing; Ngo Van Long
    Abstract: We study how the opportunity to trade in trash might influence the equilibrium outcome when the tax on the externality is determined by a political economy process. In our model, individuals have heterogeneous preferences for environmental quality, and there is a leakage when funds are transferred from the pressure groups to the politicians. When hard-core environmentalists and capitalists are organized interest groups while moderate environmentalists are not organized, we find that the politically chosen tax on the externality is below the optimal Pigouvian level. The opportunity to export waste in unlimited quantities, but at a price, is not the environmentalists' panacea and does not eliminate political social tension and suboptimal results. Nous étudions comment l'opportunité d'exporter des déchets pourrait influencer le résultat de l'équilibre lorsque la taxe sur l'externalité est déterminée par un processus d'économie politique. Dans notre modèle, les individus ont des préférences hétérogènes pour la qualité de l'environnement, et il y a une fuite lorsque les fonds sont transférés des groupes de pression aux politiciens. Lorsque les environnementalistes et les capitalistes purs et durs sont des groupes d'intérêts organisés alors que les environnementalistes modérés ne sont pas organisés, nous constatons que la taxe politiquement choisie sur l'externalité est inférieure au niveau pigouvien optimal. La possibilité d'exporter des déchets en quantités illimitées, mais à un prix, n'est pas la panacée des écologistes et n'élimine pas les tensions politiques sociales et les résultats sous-optimaux.
    Keywords: Trade in Trash,Interest Groups,Externalities,Environmental Lobby,Political Economy,Trade and Environment, Commerce des déchets,Groupes d'intérêt,Externalité,Lobby environnemental,Économie politique,Commerce et environnement
    JEL: F18 D72
    Date: 2020–08–17
  8. By: Paola Giuliano; Romain Wacziarg
    Abstract: We argue that low levels of social capital are conducive to the electoral success of populist movements. Using a variety of data sources for the 2016 US Presidential election at the county and individual levels, we show that social capital, measured either by the density of memberships in civic, religious and sports organizations or by generalized trust, is significantly negatively correlated with the vote share and favorability rating of Donald Trump around the time of the election.
    JEL: D72 Z1
    Date: 2020–08
  9. By: Bracco, Emanuele (Lancaster University); De Paola, Maria (University of Calabria); Green, Colin P. (Norwegian University of Science and Technology (NTNU)); Scoppa, Vincenzo (University of Calabria)
    Abstract: There has been a resurgence in right wing and populist politics in recent years. A common element is a focus on immigration, an increase in anti-immigrant rhetoric, and the vilification of minorities. This in turn has the potential to lead to increases in societal hostility towards immigrants. Children are likely to find themselves at the frontline of this phenomenon. This paper uses census data on two cohorts of 5th grade Italian students to estimate the causal effect of anti-immigration politics on school bullying. We use variations in the timing of municipal elections in Italy and focus on the effect of Lega Nord, a far-right party, with a strong anti-immigration platform. We demonstrate that in municipalities where elections occur and Lega Nord is highly active, the victimisation of immigrant school children increases. These effects are large, while they are absent for municipalities in which Lega Nord has little support, where no elections occurred and for native children. These findings are robust to different definitions of bullying outcomes or different definitions of Lega Nord presence. Our results suggest important negative spillovers from the political sphere to the welfare of children that are likely to be consequential.
    Keywords: bullying, immigration, politics, elections, schooling
    JEL: J15 J13 D72 I24
    Date: 2020–07
  10. By: Laurent Bach (ESSEC Business School - Essec Business School, IPP - Institut des politiques publiques); Arthur Guillouzouic (IPP - Institut des politiques publiques, PSE - Paris School of Economics, Institut d'Études Politiques [IEP] - Paris); Clément Malgouyres (IPP - Institut des politiques publiques, PSE - Paris School of Economics)
    Abstract: We estimate the impact of French town hall elections held in mid-March 2020 on the mortality of 170,000 male candidates aged above 60. Their excess mortality during March and April was similar to the general population. We compare candidates in cities with two candidate lists to those in cities with only one list, as elections are more intense in contacts in the former group. We also use a regression discontinuity design and investigate mortality in 2020 depending on how candidates fared in the 2014 election. We cannot detect any causal effect of active participation in the 2020 elections on mortality.
    Keywords: Covid-19 pandemic,French elections,individual-level data,regression discontinuity design
    Date: 2020–07
  11. By: Alessandra Casella (Columbia University [New York]); Antonin Macé (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Voters have strong incentives to increase their inuence by trading votes, a practice indeed believed to be common. But is vote trading welfare-improving or welfare-decreasing? We review the theoretical literature and, when available, its related experimental tests. We begin with the analysis of logrolling { the exchange of votes for votes, considering both explicit vote exchanges and implicit vote trades engineered by bundling issues in a single bill. We then focus on vote markets, where votes can be traded against a numeraire. We cover competitive markets, strategic market games, decentralized bargaining, and more centralized mechanisms, such as quadratic voting, where votes can be bought at a quadratic cost. We conclude with procedures allowing voters to shift votes across decisions { to trade votes with oneself only { such as storable votes or a modi_ed form of quadratic voting. We _nd that vote trading and vote markets are typically ine_cient; more encouraging results are obtained by allowing voters to allocate votes across decisions.
    Keywords: logrolling,vote trading,storable votes,quadratic voting,bundling,vote markets
    Date: 2020–08

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