nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒06‒21
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Who is in for a Party and for What? Party Identities, Selection of Politicians and Policies By Cervellati, Matteo; Gulino, Giorgio; Roberti, Paolo
  2. Electoral Competition with Costly Policy Changes: A Dynamic Perspective By Gersbach, Hans; Jackson, Matthew O.; Muller, Philippe; Tejada, Oriol
  3. Political Connections, Allocation of Stimulus Spending, and the Jobs Multiplier By Joonkyu Choi; Veronika Penciakova; Felipe Saffie
  4. The causal effect of political power on the provision of public education: Evidence from a weighted voting system By Lindgren Erik; Per Pettersson-Lidbom; Bjorn Tyrefors
  5. Political efficacy and participation: An empirical analysis in European countries By Mariana Prats; Axel Meunier
  6. Politics, Institutions and Tax Revenue Mobilization in West African Economic and Monetary Union (WAEMU) Countries By Yawovi Mawussé Isaac Amedanou
  7. The Optimal Length of Political Terms By Gersbach, Hans; Jackson, Matthew O.; Tejada, Oriol
  8. The Political Scar of Epidemics By Aksoy, Cevat; Eichengreen, Barry; Saka, Orkun
  9. Online appendix to "A time to throw stones, a time to reap: How long does it take for democratic transitions to improve institutional outcomes?" By Pierre-Guillaume Méon; Khalid Sekkat
  10. Curse of Democracy: Evidence from 2020 By NARITA Yusuke; SUDO Ayumi
  11. Clientelism, public goods provision, and governance By Maria C. Lo Bue; Kunal Sen; Staffan I. Lindberg
  12. Immigration, Occupational Choice and Electoral Rules Theory and Evidence on Dual Ballot Openness By Gamalerio, Matteo; Morelli, Massimo; Negri, Margherita
  13. A Matter of Trust? Political Trust and the Covid-19 Pandemic By Mohammad Reza Farzanegan; Hans Philipp Hofmann
  14. Politics and Gender in the Executive Suite By Alma Cohen; Moshe Hazan; David Weiss

  1. By: Cervellati, Matteo; Gulino, Giorgio; Roberti, Paolo
    Abstract: Using a quasi-natural experiment, we isolate the effect of increasing the political power of a given political party for the selection of cabinet members and the policies implemented by coalition governments. We exploit the randomization of party symbols in the ballot papers in all local elections taking place in Italy for over a decade. We document that the party whose symbol is randomly located next to the coalition candidate's name benefits from extra votes at the expense of the other parties in the same running coalition. ``Treating'' a party with a boost of votes shifts coalition policies towards this party's platform, but only for issues that feature prominently in its electoral manifesto. The documented effects are large in magnitude and also hold for smaller parties. Regarding possible mechanisms, we find that changes in the composition of elected majorities lead to the appointment of cabinet members with significantly different socio-demographic characteristics, a reflection of the treated party within the coalition. These results provide a first systematic evidence supporting the view that political ideologies are also instrumental in the selection of politicians with genuine preferences over salient issues and of their key role in mapping different positions of coalition partners into policies.
    Keywords: Quasi-natural Experiment Behavioral Political Economics Causal Estimates Selection of Politicians Coalition Governments
    Date: 2020–06
  2. By: Gersbach, Hans; Jackson, Matthew O.; Muller, Philippe; Tejada, Oriol
    Abstract: We analyze dynamic electoral competition policy changes. The costs of changing a policy increase with the extent of the shift and generate an incumbency advantage. We characterize the dynamics of Markov equilibria in terms of history and party polarization, and analyze how policies are influenced by the amplitude and convexity of costs of change, as well as by the degree of party and voter farsightedness. Regardless of the initial policy, party choices converge in the long run to a stochastic alternation between two (regions of) policies, with transitions occurring when office-holders suffer a shock to their capacity or valence. Although costs of change have a moderating effect on policies, full convergence to the median voter position does not take place.
    Keywords: costs of change; democracy; dynamic elections; Markov perfect equilibrium; Political Polarization
    JEL: C72 C73 D72 D78
    Date: 2020–06
  3. By: Joonkyu Choi; Veronika Penciakova; Felipe Saffie
    Abstract: Using American Recovery and Reinvestment Act (ARRA) data, we show that firms lever their political connections to win stimulus grants and that public expenditure channeled through politically connected firms hinders job creation. We build a unique database that links information on campaign contributions, state legislative elections, firm characteristics, and ARRA grant allocation. Using exogenous variation in political connections based on ex-post close elections held before ARRA, we causally show that politically connected firms are 38 percent more likely to secure a grant. Based on an instrumental variable approach, we also establish that a one standard deviation increase in the share of politically connected ARRA spending lowers the number of jobs created per $1 million spent by 7.1 jobs. Therefore, the impact of fiscal stimulus is not only determined by how much is spent, but also by how the expenditure is allocated across recipients.
    Keywords: campaign finance; state grants; public expenditure allocation; American Recovery and Reinvestment Act
    JEL: D22 D72 E62 H57 P16
    Date: 2021–05–13
  4. By: Lindgren Erik; Per Pettersson-Lidbom; Bjorn Tyrefors
    Abstract: In this paper, we estimate the causal effect of political power on the provision of public education. We use data from a historical nondemocratic society with a weighted voting system where eligible voters received votes in proportion to their taxable income and without any limit on the maximum of votes, i.e., the political system used in Swedish local governments during the period 1862-1909. We use a novel identification strategy where we combine two different identification strategies, i.e., a threshold regression analysis and a generalized event-study design, both of which exploit nonlinearities or discontinuities in the effect of political power between two opposing local elites: agricultural landowners and emerging industrialists. The results suggest that school spending is approximately 90-120% higher if the nonagrarian interest controls all of the votes compared to when landowners have more than a majority of votes. Moreover, we find no evidence that the concentration of landownership affected this relationship
    Date: 2021–06
  5. By: Mariana Prats; Axel Meunier
    Abstract: The active participation of citizens is the lifeblood of any functioning democracy. But what drives people’s willingness to participate in political life? A key driver is their self-perception of their ability to understand political processes and to influence change through their action. These attitudes also determine people’s level of trust in government, making it a cornerstone of research and work on trust. In a context of increasing concerns regarding democratic legitimacy and decreasing levels of political participation, this paper aims to analyse empirically to what extent people’s attitudes towards their ability to influence and engage in political life – or their “political efficacy” - affect their political behaviour, including different forms of participation. A better understanding of political attitudes can help governments anticipate democratic deficits and develop strategies to improve political efficacy and promote participation.
    Keywords: civic participation, democracy, political participation, pubilc participation, trust
    Date: 2021–06–16
  6. By: Yawovi Mawussé Isaac Amedanou (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: This paper argues that the main determinant of differences in tax revenue collection across countries are differences in political regimes and institutions. The evidence based on the 8 members States of West African Economic and Monetary Union (WAEMU) over the period 90-2017, clearly supports that tax collection leads to better economic institutions and more democratic political system. Thus, handle the problem of tax collection will entail a reform of these institutions and a democratization of the political regimes. Institutions, political regimes, and democracy significantly increase tax collection while autocracy reduces it. The findings turn out to be robust accounting for the potential endogeneity of various institutions and aid intensity through 2SLS estimates.
    Keywords: Political regime,Democracy,Autocracy,Institutions,Tax revenue,WAEMU
    Date: 2021–06
  7. By: Gersbach, Hans; Jackson, Matthew O.; Tejada, Oriol
    Abstract: We analyze the optimal length of political terms (equivalently, the optimal frequency with which elections should be held) when the candidates of two polarized parties compete for office and the median voter shifts over time. Office-holders determine policy and experience persistent random shocks to their valence. Policy changes are costly for citizens and politicians. Optimal term-length balances the frequency of costly policy changes when parties change office with the incumbent's average valence during tenure. We find that optimal term-length increases with party polarization, with the degree to which the median voter cares about valence, and with the frequency and the size of swings in the electorate. In contrast, optimal term-length decreases when candidates for office undergo less scrutiny or when parties care more about future outcomes. Finally, with small swings in the electorate and large polarization, optimal term-length increases if checks and balances increase.
    Keywords: costs of change; Elections; Polarization; term-length
    JEL: C72 C73 D72 D78
    Date: 2020–06
  8. By: Aksoy, Cevat; Eichengreen, Barry; Saka, Orkun
    Abstract: What will be political legacy of the Coronavirus pandemic? We find that epidemic exposure in an individual's "impressionable years" (ages 18 to 25) has a persistent negative effect on confidence in political institutions and leaders. We find similar negative effects on confidence in public health systems, suggesting that the loss of confidence in political leadership and institutions is associated with healthcare-related policies at the time of the epidemic. In line with this argument, our results are mostly driven by individuals who experienced epidemics under weak governments with less capacity to act against the epidemic, disappointing their citizens. We provide evidence of this mechanism by showing that weak governments took longer to introduce policy interventions in response to the COVID-19 outbreak. These results imply that the Coronavirus may leave behind a long-lasting political scar on the current young generation ("Generation Z").
    Keywords: democracy; Epidemics; political approval; Trust
    JEL: D72 F50 I19
    Date: 2020–06
  9. By: Pierre-Guillaume Méon; Khalid Sekkat
    Abstract: In this online appendix, we provide extra evidence complementing our paper “A time to throw stones, a time to reap: How long does it take for democratic transitions to improve institutional outcomes?” accepted for publication in the Journal of Institutional Economics. First, we provide additional information on the dataset and the sample. Second, we discuss four democratic transitions that illustrate our main finding: Bangladesh in 1991, Senegal in 2000, Hungary in 1990, and Nicaragua in 1990. Third, we report a series of robustness checks: a non-parametric test, using alternative definitions of transitions, using an alternative set of control variables, dropping former socialist countries, including region-specific effects, distinguishing types of transitions, conditioning the effect of democratic transitions on GDP per capita, education, and whether the transfer of power was regular or not.
    Keywords: Democratization; Democratic transitions; Institutions; Governance; Political risk
    JEL: H11
    Date: 2021–06–09
  10. By: NARITA Yusuke; SUDO Ayumi
    Abstract: Countries with more democratic political regimes experienced greater GDP loss and more deaths from Covid-19 in 2020. Using five different instrumental variable strategies, we find that democracy is a major cause of the wealth and health losses. This impact is global and is not driven by China and the US alone. A key channel for democracy's negative impact is weaker and narrower containment policies at the beginning of the outbreak, not the speed of introducing policies.
    Date: 2021–04
  11. By: Maria C. Lo Bue; Kunal Sen; Staffan I. Lindberg
    Abstract: It is widely believed that clientelism?the giving of material goods in return for electoral support?is associated with poorer development outcomes. However, systematic cross-country evidence on the deleterious effects of clientelism on development outcomes is lacking. In this paper we examine the relationship between political clientelism, public goods provision, and governance quality using cross-country panel data for 161 countries for the period 1900-2017.
    Keywords: Clientelism, Development, Benefit programmes, Corruption, Welfare
    Date: 2021
  12. By: Gamalerio, Matteo; Morelli, Massimo; Negri, Margherita
    Abstract: Do institutions affect the level of openness of immigration policies? We study theoretically and empirically how different electoral systems affect the reception of refugees, comparing Single Round Plurality with Dual Ballot systems. We focus on mayoral elections at the municipality level. Our model predicts that municipalities that elect the mayor with a Dual Ballot system receive more refugee- related fiscal transfers from the central government and are more likely to host refugees, compared to municipalities that use a Single Round Plurality system. Using data from Italian municipalities and regression discontinuity design, we provide empirical evidence that confirms the predictions of the theoretical model.
    Keywords: Electoral Rules; Immigration; Occupational choice; SPRAR
    JEL: D72 J24 J61 R23
    Date: 2020–06
  13. By: Mohammad Reza Farzanegan; Hans Philipp Hofmann
    Abstract: There is significant cross-country variation in Covid-19 fatalities worldwide. In this study, we analyze the relationship between political trust and fatalities of the Covid-19 pandemic. By performing a cross-country analysis and controlling for other determinants, we find that government trust is negatively associated with Covid-19 cases and deaths. Additionally, our findings suggest that risk communication, in the form of public information campaigns, only decreased Covid-19 cases and deaths in countries with high trust in government. We also find evidence that political trust decreases the risk of removing lockdown policies.
    Keywords: Covid-19, pandemic, trust, lockdown, cross-country regression, voluntary compliance
    JEL: I12 I18
    Date: 2021
  14. By: Alma Cohen; Moshe Hazan; David Weiss
    Abstract: Are the political preferences of CEOs associated with the representation and compensation of women in the executive suite? We find that Democratic CEOs (those who contribute more to Democratic candidates) are associated with higher representation of women in the executive suite. To explore causality, we use an event study approach and show that replacing a Republican with a Democratic CEO is associated with 20%-60% in more women in the executive suite. Finally, we show that Democratic CEOs associated with a significant reduction (or even disappearance) of the gender gap in the level and performance-sensitivity of executive pay.
    JEL: G30 J16 J30 M12 M14 M51
    Date: 2021–06

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