nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒07‒19
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Do Elections Accelerate the COVID-19 Pandemic? Evidence from a Natural Experiment By Ján Palguta; Levínský, René; Škoda, Samuel
  2. How Technological Change Affects Regional Electorates By Nikolas Schöll; Thomas Kurer
  3. Taxation under Direct Democracy By Stephan Geschwind; Felix Roesel
  4. Information Aggregation with Delegation of Votes By Dhillon, Amrita; Kotsialou, Grammateia; Xefteris, Dimitris
  5. Democracy doesn’t always happen overnight: Regime change in stages and economic growth By Vanessa Boese; Markus Eberhardt
  6. Politicians’ neighbourhoods: Where do they live and does it matter? By Olle Folke; Linna Martén; Johanna Rickne; Matz Dahlberg
  7. Mechanisms that Make Economic Inequality Increase in Democratic Countries By Harashima, Taiji
  8. Racial Diversity and Racial Policy Preferences: The Great Migration and Civil Rights By Alvaro Calderon; Vasiliki Fouka; Marco Tabellini

  1. By: Ján Palguta; Levínský, René; Škoda, Samuel
    Abstract: Elections define representative democracies, but also produce spikes in physical mobility if voters need to travel to electoral rooms. In this paper, we examine whether large-scale, in-person elections propagate the spread of COVID-19. We exploit a natural experiment from the Czech Republic which biannually renews mandates in 1/3 of Senate constituencies rotating according to the 1995 election law. We show that in the second and third weeks after the 2020 elections (held on October 9-10), new COVID-19 infections grow significantly faster in voting compared to non-voting constituencies. A temporarily-related peak in hospital admissions and essentially no changes in test positivity rates suggest that the acceleration is not merely due to increased testing. The acceleration is absent in population above 65, consistently with strategic risk-avoidance by older voters. Our results have implications for postal voting reforms or postponing of large-scale, in-person (electoral) events during viral outbreaks.
    Keywords: election,COVID-19,natural experiment,event study
    JEL: D70 D72 H0 H12 H75 I10 I18
    Date: 2021
  2. By: Nikolas Schöll; Thomas Kurer
    Abstract: This paper challenges the common perception that automation and digitalization generally reduce employment and primarily result in political discontent. Drawing on fine-grained labor market data from West Germany and shift-share instruments combined with two-way fixed-effect panel models, we study how technological change affects regional electorates. We show that the expected decline in manufacturing and routine jobs in regions with higher robot adoption or higher investment in information and communication technology (ICT) was in fact more than compensated by parallel employment growth in the service sector and cognitive non-routine occupations. This change in the regional composition of the electorate has important political implications as workers trained for these new sectors typically hold progressive political values. Consequentially, local advances in technology are associated with higher vote shares for progressive parties. This finding adds important nuance to the popular narrative that technological change fuels radical right voting.
    Keywords: technological change, automation, robots, political preferences, Voters, occupational determinants of plitical preferences
    JEL: P16 D72 O33 J31
    Date: 2021–07
  3. By: Stephan Geschwind; Felix Roesel
    Abstract: Do citizens legislate different tax policies than parliaments? We provide quasi-experimental evidence for causal effects of direct democracy. Town meetings (popular assemblies) replace local councils in small German municipalities below a specific population threshold. Difference-in-differences, RD and event study estimates consistently show that direct democracy comes with sizable but selective tax cuts. Property tax rates, which apply to all residents, decrease by some 10 to 15% under direct democracy. We do not find that business tax rates change. Direct democracy allows citizens to design tax policies more individually than voting for a high-tax or low-tax party in elections.
    Keywords: direct democracy, town meeting, popular assembly, constitution, public finance, taxation
    JEL: D71 D72 H71 R51
    Date: 2021
  4. By: Dhillon, Amrita; Kotsialou, Grammateia; Xefteris, Dimitris
    Abstract: Recent developments in blockchain technology have made possible greater progress on secure electronic voting, opening the way to better ways of democratic decision making. In this paper we formalise the features of ``liquid democracy'' which allows voters to delegate their votes to other voters, and we explore whether it improves information aggregation as compared to direct voting. We consider a two-alternative setup with truth-seeking voters (informed and uninformed) and partisan ones (leftists and rightists), and we show that delegation improves information aggregation in finite elections. We also propose a mechanism that further improves the information aggregation properties of delegation in private information settings, by guaranteeing that all vote transfers are from uninformed to informed truth-seeking voters. Delegation offers effective ways for truth-seeking uninformed voters to boost the vote-share of the alternative that matches the state of the world in all considered setups and hence deserves policy makers' attention.
    Date: 2021–01–02
  5. By: Vanessa Boese; Markus Eberhardt
    Abstract: We motivate and empirically analyse the idea that democratic regime change is not a discrete event but a two-stage process: in the first stage, autocracies enter into an ‘episode’ of political liberalization which can last for years or even decades; in the second stage, the ultimate outcome of the episode manifests itself and a nation undergoes regime change or not. Failure to account for this chronology risks biased estimates of the economic effects of democratic regime change since this ignores the relevance of the counterfactual group in which liberalisation did not culminate in a democratic transition. Using novel Varieties of Democracy (V-Dem) data on Episodes of Regime Transformation (ERT) for a large sample of countries from 1950 to 2014 we study this phenomenon in a repeated-treatment difference-in-difference framework which accounts for non-parallel pre-treatment trends and selection into treatment. Our findings suggest that a single event approach significantly underestimates the economic benefits from lasting democratic regime change.
    Keywords: Democracy, Growth, Political Development, Interactive Fixed Effects, Difference-in-Difference
    Date: 2021
  6. By: Olle Folke; Linna Martén; Johanna Rickne; Matz Dahlberg
    Abstract: This paper studies the political economy of local politicians’ neighborhoods. We use detailed population-wide data on the location of politicians’ and citizens’ homes and their socioeconomic traits. We combine this information with neighborhood level data on building permits and proposals to close schools. A descriptive analysis uncovers that politicians live in neighborhoods with more socio-economically advantaged people and more of their own party’s voters. Next, we analyze whether having politicians in a neighborhood reduces the likelihood that local public “bads†are placed there. This analysis compares home neighborhoods for politicians with different degrees of political power (ruling majority or opposition) and where power was won in a close elections. We find negative effects on approved building permits for multifamily homes and proposals to close schools. This result is most likely explained by undue favoritism. We conclude that local politicians live in advantaged neighborhoods that they shield from local public bads.
    Date: 2021
  7. By: Harashima, Taiji
    Abstract: Many empirical studies show that the level of economic inequality has worsened recently in democratic countries, which means that the majority of the electorates in these countries have agreed with, or at least not opposed, increases in economic inequality. In this paper, I show that the level of economic inequality can unintentionally and markedly increase in democratic countries because (1) households are often unable to perceive their true surrounding economic situation, (2) the primary political issue for the individual is not always to address increases in economic inequality, and (3) the government may favor a particular part of the electorate and discriminate against others. The examinations in this paper strongly suggest that democracy does not necessarily guarantee that the level of economic inequality will not significantly increase.
    Keywords: Democracy; Inequality; Misunderstanding; Redistribution; Uncertainty
    JEL: D31 D63 D80 I30
    Date: 2021–07–01
  8. By: Alvaro Calderon; Vasiliki Fouka; Marco Tabellini
    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 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 not only driven by Black voters, but also by progressive and working class segments of the white population. We identify the salience of conditions prevailing in the South, measured through increased reporting of southern lynchings in northern newspapers, as a possible channel through which the Great Migration increased whites’ support for civil rights. Mirroring the changes in the electorate, non-southern Congress members became more likely to promote civil rights legislation, but also grew increasingly polarized along party lines on racial issues.
    JEL: D72 J15 N92
    Date: 2021–06

This nep-pol issue is ©2021 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.