nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒05‒17
eighteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Mobilization and the Strategy of Populism Theory and Evidence from the United States By Gennaro, Gloria; Lecce, Giampaolo; Morelli, Massimo
  2. Why Waste Your Vote? Informal Voting in Compulsory Elections in Australia By Eamon McGinn; Shiko Maruyama
  3. Understanding the Success of the Know-Nothing Party By Alsan, Marcella; Eriksson, Katherine; Niemesh, Gregory T.
  4. Do Pandemics Shape Elections? Retrospective voting in the 1918 Spanish Flu Pandemic in the United States By Abad, Leticia Arroyo; Maurer, Noel
  5. On the (Ir)relevance of Firm Size for Bail-outs under Voter-Neutrality: The Case of Foreign Stakeholders By Schilling, Linda Marlene
  6. Banks, Political Capital, and Growth By Lambert, Thomas; Wagner, Wolf; Zhang, Eden Quxian
  7. Women Legislators and Economic Performance By Baskaran, Thushyanthan; Bhalotra, Sonia; Min, Brian; Uppal, Yogesh
  8. Immigration, Political Ideologies and the Polarization of American Politics By Dreher, Axel; Langlotz, Sarah; Matzat, Johannes; Mayda, Anna Maria; Parsons, Chris
  9. Political Parties as Drivers of U.S. Polarization: 1927-2018 By Canen, Nathan; Kendall, Chad; Trebbi, Francesco
  10. An Experiment in Candidate Selection By Casey, Katherine; Kamara, Abou Bakarr; Meriggi, Niccolo
  11. Salience and accountability: School infrastructure and last-minute electoral punishment By Nicolás Ajzenman; Ruben Durante
  12. Belt and road in the new geo-political competition: China, the United States, Europe and Korea By Kim, Duyeon
  13. Faith no more? The divergence of political trust between urban and rural Europe By Mitsch, Frieder; Lee, Neil; Morrow, Elizabeth
  14. Voting in multi-stage elimination contests: Evidence from a Karaoke show By Durán, Ashley; Mantilla, Cesar
  15. Sharing News Left and Right: The Effects of Policies Targeting Misinformation on Social Media By Daniel Ershov; Juan S. Morales
  16. A second chance elsewhere. Re-running for parliament after a close race defeat: UK vs US By Leandro De Magalhaes; Salomo Hirvonen
  17. Reconceptualising Freedom in the 21st Century: Degrowth vs. Neoliberalism By Felix Windegger; Clive L. Spash
  18. Political Decentralization and Corruption: Exploring the Conditional Role of Parties By Kshitiz Shrestha; Jorge Martinez-Vazquez; Charles Hankla

  1. By: Gennaro, Gloria; Lecce, Giampaolo; Morelli, Massimo
    Abstract: We propose a theory of strategic adoption of populism in electoral campaigns, in which a populist campaign attracts disillusioned voters but demobilizes core partisans. Under these conditions, populism is more tempting for outsider candidates in districts with low political trust or high economic insecurity, and where the race is close. We test the theory on the 2016 presidential election and the 2018 and 2020 House elections. We apply automated text analysis to campaign speeches and websites, and construct a continuous index of populism in campaign documents. We provide supportive evidence in favour of the mobilisation effects of populism, and show that outsider candidates, in competitive races, resort to more populism in response to higher economic insecurity. Drawing connections between theories of electoral mobilization and populism, this paper shows that the interaction of economic and political conditions is key to understand where politicians are more likely to ride on popular discontent.
    Keywords: American Politics; Electoral Campaign; populism; Text Analysis
    Date: 2021–01
  2. By: Eamon McGinn (University of Technology Sydney); Shiko Maruyama (University of Technology Sydney)
    Abstract: In Australia, where voting is compulsory, around 5% of votes are informal, not counting toward the outcome. Between 2004–2016, 32% of electorates reported more informal votes than votes in the margin between the winner and runner-up. Using exogenous changes in electorate boundaries, we test two hypotheses from the literature. We find the pivotal voter theory unsupported, except that better-educated voters respond to the margin more strategically. However, we do find that more candidates cause more informal votes. This choice-overload effect is observed regardless of voters’ education, indicating the role of time and effort cost rather than just cognitive ability.
    Keywords: informal voting, voter participation, pivotal voter model, redistricting, choice overload, compulsory voting, difference in differences, Australia
    JEL: C21 D72 D73 D91 H11 P16
    Date: 2021–05–03
  3. By: Alsan, Marcella; Eriksson, Katherine; Niemesh, Gregory T.
    Abstract: We study the contribution of economic conditions to the success of the first avowedly nativist political party in the United States. The Know-Nothing Party gained control of a number of state governments in the 1854-1856 elections running on a staunchly anti-Catholic and anti-Irish platform. Our analysis focuses on the case of Massachusetts, which had experienced a wave of Irish Famine immigration and was at the forefront of industrialization in the United States. Voters in towns with more exposure to Irish labor market crowdout and deskilling in manufacturing were more likely to vote for Know-Nothing candidates in state elections. These two forces played a decisive role in 1855, but not the other years of the Know Nothings' success. We find evidence of reduced wealth accumulation for native workers most exposed to labor market crowdout and deskilling, though this was tempered by occupational upgrading. The Know-Nothings lost power in 1857 to the abolitionist Republicans as the crisis over slavery came to a head, culminating in the Civil War.
    JEL: D72 J61 N00
    Date: 2020–12
  4. By: Abad, Leticia Arroyo; Maurer, Noel
    Abstract: In 2020, many observers were surprised that the Covid-19 outbreak did not appear to have swung the election. Early returns showed little indication that harder-hit areas swung away from the incumbent GOP. In 1918, however, the United States also held an election in the middle of a devastating pandemic. Using county-level epidemiological, electoral, and documentary evidence from 1918-20 we find that flu mortality had a statistically-significant negative effect on the Congressional or gubernatorial vote. The swing, while precise however, was relatively small and not enough to determine the results. We find no effect from flu mortality on turnout rates or on the 1920 presidential election. Our results hold using overall mortality in 1917 and distance to military camps as instruments for 1918 flu deaths. They also withstand tests of coefficient stability and alternative specifications. Considering that the 1918 flu was much more severe than the 2020 Covid pandemic, the historical evidence implies that surprised observers of the 2020 election should not have been so surprised.
    Keywords: Elections; Pandemics
    JEL: N0
    Date: 2021–01
  5. By: Schilling, Linda Marlene
    Abstract: A failing firm employs domestic and foreign stakeholders. The latter have no voting rights. A politician decides on the vote-share maximizing bailout. In a probabilistic voting model, I analyze whether foreign stakeholders impact bailouts. Stakeholder voters shade their vote to reward the politician, while non-stakeholder voters punish the politician for imposing bailout-financing taxes. If foreign stakeholders neither pay taxes nor receive bailouts (seasonal workers), only voters at the firm level matter. Firms with equally large stakeholder groups receive distinct bailouts in equilibrium, depending on their voter-concentration among stakeholders. If foreigners pay taxes and receive bailouts (greencard holders), they impact the electorate and thus bailouts through monetary transfers despite their lack of voting rights. Then adding foreigners can both increase or decrease bailouts. The measure of all firm stakeholders remains insufficient to determine bailouts. In either case, vote-share maximizing bailouts equal socially optimal bailouts only if all stakeholders are domestic.
    Keywords: Bailouts; Economic voting; labor migration; political economy; Probabilistic voting; socially optimal bailouts; Too-big-to-fail; vote-share maximization
    JEL: D72 G3 P16
    Date: 2020–12
  6. By: Lambert, Thomas; Wagner, Wolf; Zhang, Eden Quxian
    Abstract: We show that politically connected banks influence economic activity. We exploit shocks to individual banks' political capital following close US congressional elections. We find that regional output growth increases when banks active in the region experience an average positive shock to their political capital. The effect is economically large, but temporary, and is due to lower restructuring in the economy rather than increased productivity. We show that eased lending conditions (especially for riskier firms) can account for the growth effect. Our analysis is a first attempt to directly link the politics and finance literature with the finance and growth literature.
    Keywords: Campaign Contributions; close elections; corporate lending; creative destruction; economic growth; Political Connections; productivity
    JEL: D72 E65 G18 G21
    Date: 2020–12
  7. By: Baskaran, Thushyanthan (University of Siegen); Bhalotra, Sonia (University of Essex & University of Warwick); Min, Brian (University of Michigan, Ann Arbor); Uppal, Yogesh
    Abstract: There has been a phenomenal global increase in the proportion of women in politics in the last two decades, but there is no evidence of how this influences economic performance. We investigate this using data on competitive elections to India’s state assemblies, leveraging close elections to isolate causal effects. We find significantly higher growth in economic activity in constituencies that elect women and no evidence of negative spillovers to neighbouring male-led constituencies, consistent with net growth. Probing mechanisms, we find evidence consistent with women legislators being more efficacious, less corrupt and less vulnerable to political opportunism.
    Keywords: Political representation ; identity ; India ; gender ; women legislators ; economic growth ; luminosity ; corruption ; roads ; close elections ; electoral incentives JEL Classification: D72 ; D78 ; H44 ; H73
    Date: 2021
  8. By: Dreher, Axel; Langlotz, Sarah; Matzat, Johannes; Mayda, Anna Maria; Parsons, Chris
    Abstract: We study the extent to which migrant inflows to the United States affect the political polarization of campaign donors and the ideology of politicians campaigning for the House of Representatives in the 1992-2016 period. Implementing various polarization measures based on ideology data derived from 16 million campaign finance contributors, our results show that migrant inflows causally increase the polarization of both campaign donations and leading political candidates. Our estimates hold over the medium-run, although the effects decline over time. The effects of migration are stronger if counties host migrants from more distant cultures, or if incoming migrants are similarly educated. Our main results hold when we focus on refugees as opposed to all immigrants on aggregate.
    Keywords: migration; Polarization; Political Ideology; Refugees; United States
    JEL: F52 F63 J15
    Date: 2020–12
  9. By: Canen, Nathan; Kendall, Chad; Trebbi, Francesco
    Abstract: The current polarization of elites in the U.S., particularly in Congress, is frequently ascribed to the emergence of cohorts of ideologically extreme legislators replacing moderate ones. Politicians, however, do not operate as isolated agents, driven solely by their preferences. They act within organized parties, whose leaders exert control over the rank-and-file, directing support for and against policies. This paper shows that the omission of party discipline as a driver of political polarization is consequential for our understanding of this phenomenon. We present a multi-dimensional voting model and identification strategy designed to decouple the ideological preferences of lawmakers from the control exerted by their party leadership. Applying this structural framework to the U.S. Congress between 1927- 2018, we find that the influence of leaders over their rank-and-file has been a growing driver of polarization in voting, particularly since the 1970s. In 2018, party discipline accounts for around 65% of the polarization in roll call voting. Our findings qualify the interpretation of â?? and in two important cases subvert â?? a number of empirical claims in the literature that measures polarization with models that lack a formal role for parties.
    Keywords: discipline; Ideology; Parties; Political Polarization; Spatial voting
    JEL: D72 P48
    Date: 2020–12
  10. By: Casey, Katherine; Kamara, Abou Bakarr; Meriggi, Niccolo
    Abstract: Are ordinary citizens or political party leaders better positioned to select candidates? While the American primary system lets citizens choose, most democracies rely instead on party officials to appoint or nominate candidates. The consequences of these distinct design choices are unclear: while officials are often better informed about candidate qualifications, they may value traits-like party loyalty or willingness to pay for the nomination-at odds with identifying the best performer. We partnered with both major political parties in Sierra Leone to experimentally vary how much say voters have in selecting Parliamentary candidates. Estimates suggest that more democratic procedures increase the likelihood that parties select voters' most preferred candidates and favor candidates with stronger records of public goods provision.
    Keywords: Information provision; Political selection; primaries
    JEL: D72 H1 P16
    Date: 2021–01
  11. By: Nicolás Ajzenman (Sao Paulo School of Economics - FGV); Ruben Durante (Universitat Pompeu Fabra)
    Abstract: Can seemingly unimportant factors influence voting decisions by making certain issues salient? We study this question in the context of Argentina 2015 presidential elections by examining how the quality of the infrastructure of the school where citizens were assigned to vote influenced their voting choice. Exploiting the quasi-random assignment of voters to ballot stations located in different public schools in the city of Buenos Aires, we find that individuals assigned to schools with poorer infrastructure were significantly less likely to vote for Mauricio Macri, the incumbent mayor then running for president. The effect is larger in low-income areas - where fewer people can afford private substitutes to public education - and in places where more households have children in school age. The effect is unlikely to be driven by information scarcity, since information on public school infrastructure was readily available to parents before elections. Rather, direct exposure to poor school infrastructure at the time of voting is likely to make public education - and the poor performance of the incumbent - more salient.
    Keywords: Elections Salience Electoral Punishment Public Infrastructure Education
    JEL: D72 D83 I25 D90
    Date: 2021–04
  12. By: Kim, Duyeon
    Abstract: China under Xi Jinping is seeking to reshape international rules, norms, and institutions to gain political and economic influence under the guise of providing global public goods for mutual gains. Meanwhile, democratic and like-minded countries will need to compete in some areas and cooperate in other areas with China-a feat that is far easier said than done. The United States, Europe, Korea, and Asia must engage and compete with China on their terms, based on mutual respect and understanding without compromising values such as democracy, rule of law, and human rights as well as best practices including fair and open trade and reciprocity. These are certainly challenging tasks whose playbook and manual need to be written along the way. The United States, Europe, and South Korea must navigate unchartered territory, which China seeks to create in its image. They must identify ways to not only defend the rulesbased international order but prevent their respective economic interests from colliding with their shared interests, values, and purposes.
    Keywords: Belt and Road Initiative,United States,Europe,South Korea,Quad
    Date: 2021
  13. By: Mitsch, Frieder; Lee, Neil; Morrow, Elizabeth
    Abstract: Events such as Brexit and the Gilet Jaunes protests have highlighted the spatial nature of populism. In particular, there has been increasing political divergence between urban and rural areas, with rural areas apparently having lost faith in national governments. We investigate this divergence using data on over 125,000 from the European Social Survey from 2008-2018. We show that people in rural areas have lower political trust than urban or peri-urban residents, with this difference clear for six different forms of political institutions, including politicans, political parties, and national parliaments. There has been divergence of political trust between urban and rural Europe since 2008, although this is primarily driven by Southern Europe. While these results can be primarily explained by demographic differences between cities and the countryside, divergent economic experiences, differences in values and perspectives that public services are less effective outside of urban areas, there is a residual 'rural effect' beyond this. We argue that the polarization of urban-rural political trust has important implications for the functioning of political democracies.
    Keywords: political trust; urban-rural division; polarisation; European Social Survey
    JEL: N0
    Date: 2021–05
  14. By: Durán, Ashley; Mantilla, Cesar
    Abstract: We employ the data from a karaoke contest to analyze strategic voting. Participants face a trade-off when voting for the contestant they want to eliminate. Excluding worst-performers increases the size of the prize allocated to the winner, whereas excluding top-performers increases the chances to become the winner. We analyze the performance and voting decisions and justifications of 138 participants in this contest across 23 episodes. We find that votes for worst-performers are much more common than votes for top-performers, and the justifications for voting due to the competitors' mistakes are the most prominent. Although contestants are not informed of the performance of themselves or any other participant, the likelihood to vote for the worst-performer is higher than the probability of randomly voting for someone else.
    Date: 2021–05–03
  15. By: Daniel Ershov; Juan S. Morales
    Abstract: We study Facebook’s and Twitter’s policy interventions which aimed to reduce the spread of misinformation during the 2020 US election. Facebook changed its news feed algorithm to reduce the visibility of content, while Twitter changed its user interface, nudging users to be thoughtful about sharing content. Using data on tweets and Facebook posts published by news media outlets, we show both policies significantly reduced news sharing, but the reductions varied heterogeneously by outlets’ factualness and political slant. On Facebook, content sharing fell relatively more for low-factualness outlets. On Twitter, content sharing fell relatively more for left-wing and high-factualness outlets.
    Keywords: social media, news sharing, media slant, fake news, misinformation.
    JEL: D72 L82 L86 O33
    Date: 2021
  16. By: Leandro De Magalhaes; Salomo Hirvonen
    Abstract: In parliamentary elections in the UK it is common for candidates to move across constituencies from one election to another. To correctly estimate the effect of holding office (vs. being the runner-up) on future electoral prospects, the outcome variable must include individuals that re-run in other constituencies. In the US we find that very few winners or runners-up re-run in a different district. In the UK we find runners- up move and win elsewhere more frequently than winners in both parties { overall and in close races. Our results reveal a clear difference in the career advantage of holding office between the US and the UK that is almost entirely driven by the ability of UK runners-up to re-run and win elsewhere. Such UK-US difference is not apparent when comparing estimates of the individual incumbency advantage.
    Date: 2021–05–06
  17. By: Felix Windegger; Clive L. Spash
    Abstract: The hegemonic role of neoliberal ideas in todayÂ’s political-economic thought and practice has shaped the common way of thinking about freedom in Western society and more generally in the international community. This involves a negative, individualistic and market-centred interpretation of the concept. In contrast, visions of a degrowth society offer a radical alternative based on Cornelius CastoriadisÂ’ notion of autonomy. This paper outlines how this formulation of freedom can be conceptualised relative to the predominant neoliberal theory. We present an overview and contrast of both positions and then follow this up with an empirical study. More specifically, we probe the extent to which the degrowth movement actually follows the Castoriadian theory of freedom as opposed to the hegemonic neoliberal conception. Results are reported from a survey conducted at the 2018 Degrowth Conference in Malmö, Sweden. While survey participants were found to hold positions consistent with the Castoriadian theory, we also identify problematic and under-conceptualised aspects in their understanding of freedom. This points to the need for the degrowth movement to directly address its theoretical foundations, and elaborate on and strengthen its vision of freedom compatible with a future degrowth society.
    Keywords: Political economy; freedom; Degrowth; neoliberalism; autonomy; social-ecological economic transformation; Castoriadis; Hayek; Friedman
    JEL: A13 B5 O44 P1 P48 Q57
    Date: 2021
  18. By: Kshitiz Shrestha (International Center for Public Policy, Georgia State University, USA); Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University, USA); Charles Hankla (Department of Political Science, Georgia State University, USA)
    Abstract: This paper investigates how national levels of corruption are influenced by the interaction of two factors: the presence of local elections and the organizational structure of national parties. Previous studies have focused primarily on the role of fiscal decentralization on corruption and have mostly ignored political context. We argue here that corruption will be lower when local governments are more accountable to and more transparent towards their constituents. This beneficial arrangement is most likely, we find, when local elections are combined with non-integrated political parties, that is, where party institutions themselves are decentralized from national control. Such an institutional arrangement maximizes local accountability by putting the decision to nominate and elect local leaders in the hands of those best in a position to evaluate their honesty – local electors. In our empirical analyses, using new data in a series of expansive models across multiple countries and years, we find support for our arguments.
    Date: 2021–04–15

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