nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒05‒10
24 papers chosen by
Eugene Beaulieu
University of Calgary

  1. Taxes and Turnout: When the decisive voter stays at home By Bierbrauer, Felix; Tsyvinski, Aleh; Werquin, Nicolas
  2. Public opinion and special interests in American environmental politics By Elise Grieg
  3. The Best at the Top? Candidate Ranking Strategies Under Closed List Proportional Representation By Benoit S Y Crutzen; Hideo Konishi; Nicolas Sahuguet
  4. Class Altruism and Redistribution By Ghiglino, Christian; Juárez-Luna, David; Müller, Andreas
  5. Establishment and Outsiders : Can Political Incorrectness and Social Extremism work as a Signal of Commitment to Populist Policies? By Gonnot, Jerome; Seabright, Paul
  6. Are Political and Charitable Giving Substitutes? Evidence from the United States By Perez-Truglia, Ricardo; Petrova, Maria; Simonov, Andrei; Yildirim, Pinar
  7. Public debt and the political economy of reforms By Boyer, Pierre; Esslinger, Christoph; Roberson, Brian
  8. A political economy of loose means-testing in targeted social programs By Cremer, Helmuth; Klimaviciute, Justina; Pestieau, Pierre
  9. The Inefficient Combination: Competitive Markets, Free Entry, and Democracy By Mehlum, Halvor; Natvik, Gisle James; Torvik, Ragnar
  10. Natural resource rents, autocracy and economic freedom By Morten Endrikat
  11. Self-Signaling in Moral Voting By Mechtenberg, Lydia; Perino, Grischa; Treich, Nicolas; Tyran, Jean-Robert; Wang, Stephanie
  12. Understanding the Origins of Populist Political Parties and the Role of External Shocks By Levi, Eugenio; Sin, Isabelle; Stillman, Steven
  13. Be kind or take it on the chin? Political narratives, pandemics, and social distancing By Kartik Anand; Prasanna Gai; Edmund Lou; Sherry X. Wu
  14. The Electoral Impact of Wealth Redistribution: Evidence from the Italian Land Reform By Caprettini, Bruno; Casaburi, Lorenzo; Venturini, Miriam
  15. Freedom of Speech, Deterrence, and Compellence in the Parliament By Altindag, Duha T.; Mocan, Naci; Zhang, Jie
  16. Racial Diversity, Electoral Preferences, and the Supply of Policy: The Great Migration and Civil Rights By Calderon, Alvaro; Fouka, Vasiliki; Tabellini, Marco
  17. Power ranking of the members of the Agricultural Committee of the European Parliament By Imre Fertõ; László Á. Kóczy; Kovács Attila; Balázs R. Sziklai
  18. Income Shocks, Inequality, and Democracy By Kotschy, Rainer; Sunde, Uwe
  19. Simple-majority rule and the size of the Bundestag By Salvatore Barbaro; Anna Specht
  20. Democracy, Corruption and Unemployment: Empirical Evidence from Developing Countries By OUEGHLISSI, Rim; DERBALI, Ahmed
  21. The political economy of coastal development By Magontier, Pierre; Sole-Olle, Albert; Viladecans-Marsal, Elisabet
  22. The voting premium By Levit, Doron; Malenko, Nadya; Maug, Ernst
  23. Economic and Institutional Consequences of Populism By Magud, Nicolas; Spilimbergo, Antonio
  24. Economic Conditions and the Rise of Anti-Democratic Extremism By Benjamin Crost

  1. By: Bierbrauer, Felix; Tsyvinski, Aleh; Werquin, Nicolas
    Abstract: We develop a model of political competition with endogenous turnout and endogenous platforms. Parties trade off incentivizing their supporters to vote and discouraging the supporters of the competing party from voting. We show that the latter objective is particularly pronounced for a party with an edge in the political race. Thus, an increase in political support for a party may lead to the adoption of policies favoring its opponents so as to asymmetrically demobi- lize them. We study the implications for the political economy of redistributive taxation. Equilibrium tax policy is typically aligned with the interest of voters who are demobilized.
    Date: 2021–03
  2. By: Elise Grieg (CER–ETH – Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: To shed light on the political inertia around environmental legislation, I study the response of US senators to public opinion while controlling for special interest pressure. I combine data on public opinion (PO) on climate change---estimated by multilevel regression with poststratification---with campaign contributions from the extractive industries to indicate special interest (SI) influence, and use senator fixed effects, instrumental variables and the timing of senate elections for identification. PO has a strong impact on environmental legislation. The effects are different for the two parties: Republicans react to PO in election cycles, whereas Democrats are responsive through their whole term. The responsiveness of elected officials to environmental opinion is surprising: while Americans often favour envi- ronmental regulation in general, they tend to consider it as of low importance. I discuss possible explanations.
    Keywords: Public opinion, campaign finance, political economy, climate change
    JEL: D72 Q54 Q58
    Date: 2021–04
  3. By: Benoit S Y Crutzen (Erasmus School of Economics); Hideo Konishi (Boston College); Nicolas Sahuguet (HEC Montreal)
    Abstract: Under closed-list proportional representation, a partyís electoral list determines the order in which legislative seats are allocated to candidates. When candidates differ in their ability, parties face a trade-off between competence and incentives. Ranking candidates in decreasing order of competence ensures that elected politicians are most competent. Yet, party list create incentives for candidates that may push parties not to rank candidates in decreasing competence order. We examine this trade-off in a game-theoretical model in which parties rank their candidate on a list, candidates choose their campaign effort, and the election is a team contest for multiple prizes. We show that the trade-off between competence and incentives depends on candidatesíobjective and the electoral environment. In particular, parties rank candidates in decreasing order of competence if candidates value enough post-electoral high offices or media coverage focuses on candidates at the top of the list.
    Keywords: voting, proportional representation, tradeoffs, ranking
    JEL: C72 D72 D82
    Date: 2021–05–01
  4. By: Ghiglino, Christian; Juárez-Luna, David; Müller, Andreas
    Abstract: Why do tax rates vary so much across countries? We study the role of other-regarding preferences and ethnic fragmentation in redistribution. The government of a two-party democracy is elected by altruistic voters and decides on a redistributive income tax. Social identification directs voters' altruism toward specific social groups. We identify three main factors that lead to low levels of redistribution in the political equilibrium: (i) strong in-group altruism of the rich voters---which we refer to as class altruism; (ii) weak universal altruism among all voters---in particular the rich; and (iii) ethnic fragmentation among poor voters. Using survey data, we document evidence on the pattern of altruism in the United States and the European Union and find that our model predictions are consistent with the observed differences in tax rates.
    Keywords: altruism; Ethnic fragmentation; inequality; Probabilistic voting; redistribution; Social classes; social identity; Tax rate
    JEL: D64 D71 D72 H20
    Date: 2021–02
  5. By: Gonnot, Jerome; Seabright, Paul
    Abstract: This paper explores why voters might vote for candidates who espouse extreme policies that voters do not support or behave in ways that they do not approve. We develop a model in which these policies and behaviors serve as signals that the candidates are outsiders to the political establishment, and therefore more likely than Establishment candidates to implement economic policies that are congruent with voters' interests. Establishment candidates seeking election may therefore choose an extreme social platform or indulge in offensive behavior for \textit{populist} reasons - that is, as a way of signaling independence from the interests of the Establishment. This populist strategy is more likely when the value of social policies as signals of future economic policy outweighs their value as signals of future social policies, when voters' trust in economic and social policy announcements is low, when the cost for candidates of breaking campaign promises once elected is low, and when there exist few alternative ways for the voters to predict future policies. We present empirical support from the US and Europe for the main prediction of the model that liberal voters are more likely to vote for social outsiders when they have lower levels of trust in politicians.
    Keywords: median voter model; populism
    JEL: D72 D78 D81
    Date: 2021–03
  6. By: Perez-Truglia, Ricardo; Petrova, Maria; Simonov, Andrei; Yildirim, Pinar
    Abstract: We provide evidence that individuals substitute between political contributions and charitable contributions, using micro data from the American Red Cross and Federal Election Commission. First, in a lab experiment, we show that information on the importance of charitable giving increases donations to charities and reduces donations to politics, while information on the importance of political campaigns has the opposite effect. We also show that similar results hold in observational data. We find that foreign natural disasters, which are positive shocks to charitable giving, crowd out political giving. We also find that political advertisement campaigns, which are positive shocks to political giving, crowd out charitable giving. Our evidence suggests that some individuals give to political and charitable causes to satisfy similar needs.
    Date: 2021–03
  7. By: Boyer, Pierre; Esslinger, Christoph; Roberson, Brian
    Abstract: We develop a two-period model of redistributive politics in which two politicians compete in an election in each period. In the first period, the politicians propose both whether to experiment with an efficient reform with uncertain benefits and choose the amount of public debt. Politicians also allocate pork-barrel spending to voters in each period. We show that allowing politicians to raise debt ensures that the reform is always implemented when the reform's ratio of private good to public good gains exceeds a threshold, i.e. the reform generates enough private good benefits. This is not the case when the reform's ratio of private good to public good gains is below this threshold. We also examine hard and a soft debt limits, and find that both limits reduce the political success of the reform. However, at moderate debt levels soft limits dominate hard limits with respect to equilibrium efficiency of reform provision.
    Keywords: Debt and Spending Limits; Political Competition; public debt; Redistributive politics; reforms
    JEL: C72 D72 D78 H60
    Date: 2021–03
  8. By: Cremer, Helmuth; Klimaviciute, Justina; Pestieau, Pierre
    Abstract: This paper studies the political sustainability of programs that are targeted towards the poor. Given that the poor to whom these programs cater do not constitute a majority, we show that for their own good it pays to let the middle class benefit from them in a random way. This approach mimics the actual institutional arrangements whereby middle-class individuals feel that they can successfully apply to the programs. We consider a two stage decision process: first a Rawlsian government chooses the probability at which the middle class is allowed to benefit from a given program; then, majority voting determines the level of benefit and the rate of contribution. At the first, constitutional stage, the government cannot commit to a specific level of taxes and benefit but anticipates that these are set by majority voting in the second stage.
    Keywords: Political Support; Redistribution paradox; Targeted transfers
    JEL: D72 H23 H50
    Date: 2021–01
  9. By: Mehlum, Halvor; Natvik, Gisle James; Torvik, Ragnar
    Abstract: We show that under fairly general conditions, the combination of (i) competitive markets, (ii) free entry, and (iii) democracy is inconsistent with allocative efficiency. This fundamental impossibility result, which has not been derived before, holds whenever not only prices, but also policy, responds to factor allocations. We develop a theory where agents enter an occupation (more generally, enter an economic activity) and thereafter make a policy decision. Thus, each voter's self interest becomes endogenous to the entry decision. In our baseline model, the policy instrument that citizens decide upon is simply taxation. Workers in occupations whose services are in high demand by the government have an incentive to vote for high taxes. Voters in occupations whose services are in low demand by the government have an incentive to vote for low taxes. We show that the socially efficient size of the public sector cannot be sustained in equilibrium, despite free entry into occupations. We generalize our theory, and show how our impossibility result extends well beyond the baseline model. We also discuss how departing from competitive markets may affect equilibrium outcomes. Our analysis implies that when assessing causes and consequences of factor allocations, it is key to acknowledge how allocations affect not only prices, but also policies.
    Keywords: Dutch disease; Efficiency and Democracy; Endogenous Political Interests; Labor market institutions; political economy; The Size of Government
    JEL: D72 H11 P16 P48
    Date: 2021–01
  10. By: Morten Endrikat (University of Aachen)
    Abstract: This paper theoretically and empirically investigates the effect of natural resource rents on the process of economic liberalization and a potential moderating effect of the level of democracy. A simple political-economic model is developed in which the government in an autocratic country faces a trade-off between liberalizing the economy to broaden the tax base on the one hand and consolidating its political power by preventing the rise of an economically independent middle class striving for political participation on the other hand. Whilst the theoretical model predicts that rents from natural resources lead to economic liberalization in both autocratic and democratic countries, the empirical analysis finds evidence that increasing resource abundance may lead to deliberalization in autocracies but may promote liberalization in democracies. The empirical evidence is robust to using both static panel data methods that control for unobserved country heterogeneity as well as a dynamic GMM estimator that further controls for potential endogeneity issues.
    Keywords: Natural Resources, Resource Curse, Institutions, Taxation, Economic Liberalization, Entrepreneurship
    JEL: D73 H20 O13 O39 Q32 Q38
    Date: 2021
  11. By: Mechtenberg, Lydia; Perino, Grischa; Treich, Nicolas; Tyran, Jean-Robert; Wang, Stephanie
    Abstract: This paper presents a two-wave survey experiment on self-image concerns in moral voting. We elicit votes on the so-called Horncow Initiative. This initiative required subsidization of farmers who refrain from dehorning. We investigate how non-consequentialist and non-deontological messages changing the moral self-signaling value of a Yes vote affect selection and processing of consequentialist information, and reported voting behavior. We find that a message enhancing the self-signaling value of a Yes vote is effective: voters agree more with arguments in favor of the initiative, anticipate more frequently voting in favor, and report more frequently having voted in favor of the initiative.
    Keywords: information avoidance; moral bias; multi-wave field experiment; voting
    JEL: C93 D72 D91
    Date: 2021–01
  12. By: Levi, Eugenio (Masaryk University); Sin, Isabelle (Motu Economic and Public Policy Research Trust); Stillman, Steven (Free University of Bozen/Bolzano)
    Abstract: We use electoral survey data to examine the impact that two large external shocks had on the development of New Zealand First (NZF), one of the oldest populist parties in the OECD. We find that structural reforms, which led to large negative impacts on particular locations, and immigration reforms, which led to large spatially concentrated increases in skilled migration, both increased voting for NZF in its first years of existence. These shocks led to changes in political attitudes and policy preferences and had persistent effects on voting for NZF even twenty years later. Overall, they play an important role in explaining the rise of populism in NZ. Understanding how these shocks led to the development of NZF is particularly relevant for thinking about how populism has been extending its reach in the 2010s.
    Keywords: populism, political parties, trade, immigration, shocks
    JEL: D72 P16 H40
    Date: 2021–04
  13. By: Kartik Anand; Prasanna Gai; Edmund Lou; Sherry X. Wu
    Abstract: How does a political leader's messaging during a pandemic influence social distancing by citizens? We model the strategic choice of narrative in a beauty contest setting where the leader seeks to eliminate the disease. The leader's resolve to eliminate the disease affects her narrative in a non-linear way. A resolute leader adopts a highly partisan narrative that identifies strongly with her followers, albeit at the expense of her payoff, while an ambivalent leader with low resolve for eliminating the disease is less partisan. Our result speaks to the debate on the voluntary acceptance of limits to individual liberty during a pandemic.
    Keywords: Beauty contests, pandemic, COVID-19, political narratives, leadership
    JEL: D7 D84 D91 H12 I12
    Date: 2021–03
  14. By: Caprettini, Bruno; Casaburi, Lorenzo; Venturini, Miriam
    Abstract: Governments often implement large-scale redistribution policies to gain enduring political support. However, little is known on whether such policies generate sizable gains, whether these gains are persistent, and why. We study the political consequences of a major land reform in Italy. A panel spatial regression discontinuity design shows that the reform generated large electoral gains for the incumbent Christian Democratic party, and similarly large losses for the Communist party. The electoral effects persist over four decades. Farmers' grassroots organizations and continued political investment in reform areas (i.e. fiscal transfers and public sector employment) are plausible mechanisms for this persistence. We find less support for other potential explanations, including migration, voters' beliefs, and patterns of economic development.
    Keywords: Italy; Land reform; redistribution; voting
    JEL: D72 N54 P16 Q15
    Date: 2021–01
  15. By: Altindag, Duha T. (Auburn University); Mocan, Naci (Louisiana State University); Zhang, Jie (Hunan University)
    Abstract: In most countries Parliamentary immunity protects lawmakers from civil or criminal charges while in office, and it shields them from prosecution for their political speech or political actions. This paper presents the first empirical analysis in the literature of the impact of Parliamentary immunity on the behavior and performance of politicians. Leveraging a Constitutional Amendment, the adoption of which lifted the immunity of 132 of the 550 members of the Turkish Parliament, we find that immunity from prosecution impacts how the Members of the Parliament (MPs) act and perform their duties in the Parliament. Losing immunity (and the resultant presumed fear of prosecution) pacifies the MPs of the opposition parties. They become less diligent in the Parliament (drafting fewer pieces of legislation, initiating fewer investigation inquiries, delivering fewer and shorter speeches) and become less aggressive (interrupting other MPs less frequently). They also reduce their tendency to cast dissenting votes against the government. MPs of the opposition parties who lose their immunity are less likely to get re-nominated by their parties in the next election, and they are less likely to get re-elected. We find no evidence that more outspoken and active opposition MPs or those who are more valuable for their parties have been targeted for immunity revocation. There is no evidence that the MPs, who retained immunity, have increased their Parliamentary efforts in reaction to their same-party colleagues losing immunity. We find that laws are passed faster after the Constitutional Amendment was adopted, possibly as a consequence of reduced opposition and deliberation. Using Eurobarometer surveys, we find that citizens' reactions to the revocation of MP immunity are polarized. An individual's trust in the Parliament is decreased or increased based on whether an MP from the individual's province lost immunity and if that MP subscribes to the same or opposing ideology as the individual.
    Keywords: parliamentary immunity, constitution, effort, prosecution, member of parliament, opposition party
    JEL: P16 K40 D72 H0
    Date: 2021–05
  16. By: Calderon, Alvaro (Stanford University); Fouka, Vasiliki (Stanford University); Tabellini, Marco (Harvard Business School)
    Abstract: Between 1940 and 1970 more than 4 million African Americans moved from the South to the North of the United States, during the Second Great Migration. This same period witnessed the struggle and eventual success of the civil rights movement in ending institutionalized racial discrimination. This paper shows that the Great Migration and support for civil rights are causally linked. Predicting Black inflows with a version of the shift-share instrument, we find that the Great Migration increased support for the Democratic Party and encouraged pro-civil rights activism in northern and western counties. These effects were driven by both Black and white voters, and were stronger in counties with a lower history of discrimination and with a larger working class and unionized white population. Mirroring the changes in the electorate, non-southern Congress members became more likely to promote civil rights legislation. Yet, these average effects mask heterogeneity in the behavior of legislators, who grew increasingly polarized along party lines on racial issues. Overall, our findings indicate that the Great Migration promoted Black political empowerment outside the South. They also suggest that, under certain conditions, cross-race coalitions can be major drivers of social and political change.
    Keywords: diversity, civil rights, great migration, race
    JEL: D72 J15 N92
    Date: 2021–04
  17. By: Imre Fertõ (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary and Kaposvár University, Kaposvár, Hungary); László Á. Kóczy (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungaryand Department of Finance, Budapest University of Technology and Economics, Hungary); Kovács Attila (Károli Gáspár University of the Reformed Church, Budapest, HungaryBudapest, Hungary); Balázs R. Sziklai (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary and Department of Operations Research and Actuarial Sciences, Corvinus University of Budapest, Hungary)
    Abstract: We aim to identify the most influential members of the Agricultural Committee of the European Parliament (COMAGRI). Unlike previous studies that were based on case studies or interviews with stakeholders, we analyse the voting power of MEPs using a spatial Banzhaf power index. We identify critical members: members whose votes are necessary to form winning coalitions. We found that rapporteurs, EP group coordinators and MEPs from countries with high relative Committee representations, such as Ireland, Poland or Romania are powerful actors. Italy emerges as the most influential member state, while France seems surprisingly weak.
    Keywords: European Parliament, Common Agricultural Policy, voting games, Banzhaf index, voting game over a convex geometry
    JEL: D71 D72 Q18
    Date: 2021–03
  18. By: Kotschy, Rainer; Sunde, Uwe
    Abstract: In this paper, motivated by contradictory evidence on the effect of income on democracy, we investigate the hypothesis that it is income shocks – major income fluctuations relative to the trend – rather than marginal year‐on‐year variation in income levels that lead to non‐trivial changes in the quality of political institutions. Empirical results provide support for this hypothesis, and show how income inequality plays a crucial role in the effects of economic shocks on democracy. In particular, negative income shocks reveal a positive effect on democracy in countries with high inequality, and vice versa.
    Date: 2021
  19. By: Salvatore Barbaro (Johannes Gutenberg University Mainz); Anna Specht (Johannes Gutenberg-University Mainz)
    Abstract: How should an excessively large parliament be effectively reduced in size without violating constitutional principles? This is a question that the German Bundestag discussed since introducing the 2013 electoral reform until today. Facing a Bundestag consisting of 709 members and facing some public dissatisfaction, are reform to decrease the parliament’s size was adopted in 2020. With the 2017 elections taking place under the new electoral rule, the size would have been 686 instead of 709. However, the opposition filed a lawsuit against the new electoral law with the German Federal Constitutional Court. Aside from legal considerations, the adherence to plurality rule has to be criticised from a social-choice perspective. This paper aims to determine if the size and composition of the Bundestag change. Inparticular, whether the size is reduced when the German parliament’s directly-elected members are elected using the simple-majority rule. Thus, a statistical simulation is carried out. We show that the targeted size of the Bundestag of 686 MP can be achieved by using the simple-majority rule to select the directly-elected members of parliament. Though, as we find indications that even Condorcet losers were elected into parliament, applying the simple-majority rule would ensure that only Condorcet winner would be elected directly into the Bundestag.
    JEL: D71
    Date: 2021–03–05
  20. By: OUEGHLISSI, Rim; DERBALI, Ahmed
    Abstract: The literature on democracy and corruption is inconclusive on the effect of democracy on corruption. We intend to supplement this void by arguing that an interaction between democracy and unemployment may exist in shaping the de facto corruption levels. This paper examines whether such conjuncture exists. We estimate a linear dynamic panel-data model using data from 78 developing countries over the period 1990–2018. We find that democracy reduce corruption. However, the potential beneficial effect of democracy on corruption is eroded by higher unemployment rate. The results are robust and quantitatively similar across different empirical specifications. These results imply that developing countries should focus on decreasing unemployment level so as to take advantage of democratization in their fight against corruption.
    Keywords: Democracy, Corruption, Unemployment, GMM
    JEL: C23 D7 O1
    Date: 2021–04–12
  21. By: Magontier, Pierre; Sole-Olle, Albert; Viladecans-Marsal, Elisabet
    Abstract: We study the role of intergovernmental cooperation in protecting coastal land from development in Spain. Curbing the development of coastal land may generate benefits (e.g., preservation of environmental amenities and reduced tourist congestion) and costs (e.g., job losses), not only for residents in the political jurisdiction, but also for non-residents. Local governments may therefore make decisions in isolation that do not take account of the welfare of non-residents and may not choose the right amount of development. In this paper we investigate how political alignment between the mayors of neighboring municipalities may enhance incentives to cooperate and affect development in coastal areas. Using a regression discontinuity design and high-quality administrative data from the cadaster on the amount of built-up land along the Spanish coast, we found that municipalities with mayors belonging to the ideological bloc governing a majority of municipalities in a coastal area develop less land than other municipalities. This effect is larger for land very close to the coast and in municipalities with a higher share of environmentally valuable land.
    Keywords: land-use policy; Local government; Regression Discontinuity
    JEL: D72 H70 R52
    Date: 2021–02
  22. By: Levit, Doron; Malenko, Nadya; Maug, Ernst
    Abstract: This paper develops a theory of blockholder governance and the voting premium. A blockholder and dispersed shareholders first trade in a competitive market and then vote at a shareholder meeting. A positive voting premium emerges only if the blockholder is not the median voter, since he is then willing to pay a higher price to move the median voter in his preferred direction. Hence, the voting premium does not emerge from exercising control, but from influencing who exercises control. Empirical measures of the voting premium generally do not reflect the economic value of voting rights to the blockholder, and the voting premium is unrelated to measures of voting power, such as the probability of being pivotal. A negative voting premium can emerge in situations when dispersed shareholders could free-ride on the blockholder's trades.
    Keywords: blockholders; corporate governance; Ownership Structure; Shareholder rights; Trading; voting; voting premium
    JEL: D74 D82 D83 G34 K22
    Date: 2021–01
  23. By: Magud, Nicolas; Spilimbergo, Antonio
    Abstract: We analyze the institutional and economic consequences of populism in Latin America in the last 50 years. Populist regimes weaken institutions and macroeconomic (fiscal, monetary, and external) indicators, resulting in crises and worse income distribution. The duration of populist regimes depends on favorable external conditions. In particular, the commodity super-cycle of the 2000s and easy financing conditions allowed populists to stay in power longer than in past episodes.
    Keywords: Commodity supercycle; institutions; Latin America; political economy; populism
    JEL: E0 N1
    Date: 2021–02
  24. By: Benjamin Crost (University of Illinois at Urbana Champaign)
    Abstract: This paper provides evidence that adverse economic conditions contributed to the rise of anti-democratic extremism in the United States. A state-level analysis shows that increases in the unemployment rate during the Great Recession led to a large increase in the number of anti democratic extremist groups. The effect is concentrated in states with high pre-existing racial resentment, as proxied by racist web searches, and strongest for the male unemployment rate and the white unemployment rate. If unemployment had remained at its pre-recession level, the increase in anti-democratic groups between 2007 and 2010 could have been reduced by more than 60%.
    Keywords: United States, Great Recession, Economic Conditions, Unemployment, Anti-Democratic Extremism, Anti-Government Movement
    JEL: D72 D74 H56
    Date: 2021–03

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