nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒05‒02
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voting under threat: evidence from the 2020 French local elections By Leromain, Elsa; Vannoorenberghe, Gonzague
  2. The Election Day that Lasted 84 Days: Mapping the Electoral Geography of the 2019 Istanbul Metropolitan Mayoral Race By Gülhan, Sinan Tankut
  3. How the Media Matters for the Economic Vote: Evidence from Britain By Chitralekha Basu
  4. Labor unions and the electoral consequences of trade liberalization By Molina Ogeda, Pedro; Ornelas, Emanuel; Soares, Rodrigo R.
  5. Other-Regarding Preferences and Redistributive Politics By Ernst Fehr; Thomas Epper; Julien Senn
  6. Rally Post-Terrorism By Shuai Chen
  7. Becoming neighbors with refugees and voting for the far-right? The impact of refugee inflows at the small-scale level By Fremerey, Melinda; Hörnig, Lukas; Schaffner, Sandra
  8. The backlash of globalization By Colantone, Italo; Ottaviano, Gianmarco; Stanig, Piero
  9. State-Level Economic Policy Uncertainty By Baker, Scott R.; Davis, Steven J.; Levy, Jeffrey A.
  10. Does cohesion policy reduce EU discontent and Euroscepticism? By Rodríguez-Pose, Andrés; Dijkstra, Lewis
  11. Populist Discourse and Entrepreneurship: The Role of Political Ideology and Institutions By Daniel L. Bennett; Christopher J. Boudreaux; Boris N. Nikolaev
  12. Frozen or malleable? Political ideology in the face of job loss and unemployment By Wiertz, Dingeman; Rodon, Toni
  13. (Mis-)information technology: Internet use and perception of democracy in Africa By Joël Cariolle; Yasmine Elkhateeb; Mathilde Maurel
  14. Economic geography, politics, and the world trade regime By Rickard, Stephanie

  1. By: Leromain, Elsa; Vannoorenberghe, Gonzague
    Abstract: We study how Covid-related risk affected participation across the French territory in the March 2020 local elections. We document that participation went down disproportionately in towns exposed to higher Covid-19 risk. Towns that lean towards the far-right saw a stronger drop in turnout, in particular in the vicinity of clusters. We argue that these patterns are partly a result of risk perceptions, and not only of political considerations. We use data on the drop in cinema admissions in early March 2020 and show that these went down more around infection clusters, especially in areas with substantial vote for the far-right. Taken together, our findings suggest that the fear of Covid-19 may have been on average more prevalent among far-right voters, contributing to a drop in their electoral participation.
    Keywords: electoral turnout; local elections; Covid-19; far-right; coronavirus
    JEL: D72
    Date: 2021–07–30
  2. By: Gülhan, Sinan Tankut (Gaziantep University)
    Abstract: The Istanbul metropolitan mayoral election in 2019 provided a suitable way to study the subtle and apparent shifts in the Turkish political landscape. For the first time in recent history, opposition gained ground in this main commercial and population hub. So far, Istanbul local politics were treated from an aspatial perspective. Here, we employ spatial econometrics to understand the subtle groundswell in Istanbul’s political geography. This paper maps the electoral change that took place in the 84 days between two elections using 31 thousand ballot data based on 782 districts in Istanbul. In addition to the change in voting patterns we also employ two different datasets to better situate the change of public opinion. The first database is the socioeconomic status indexing of Istanbul’s districts. The second database comes from the author’s own work employing python-based datamining the online database of for sale properties in Istanbul on the verge of the 2019 election. An OLS regression analysis and a spatial-lag regression is applied on the datasets. The results are contrary to the political punditry and points to a newly emerging middle-class coalition.
    Date: 2022–04–02
  3. By: Chitralekha Basu (University of Cologne)
    Abstract: This study uses data from the 2005-10 British Election Panel Study to examine the effect of media coverage on voter evaluations of the incumbent government following the 2007-8 financial crisis. By combining sentiment analysis of newspaper content with an instrumental variables approach, I show that newspapers' coverage of these events influenced how their readers, and especially Labour-supporting readers, evaluated the Labour government's handling of the crisis and also the economy in general. I also show that newspaper framing of these events influenced readers' propensity to support Labour throughout the subsequent general election campaign. Formal sensitivity analyses provide further evidence that these effects are not driven by readers' previous assessments of the Labour party. I thus demonstrate that media framing of economic events, through its effects on reader evaluations of incumbents' economic competence, can have durable electoral implications.
    Keywords: Political communication; Media effects; Economic voting
    JEL: D72 D83 L82
    Date: 2022–03
  4. By: Molina Ogeda, Pedro; Ornelas, Emanuel; Soares, Rodrigo R.
    Abstract: We show that the Brazilian trade liberalization in the early 1990s led to a permanent relative decline in the vote share of left-wing presidential candidates in the regions more affected by the tariff cuts. This happened even though the shock, implemented by a right-wing party, induced a contraction in manufacturing and formal employment in the more affected regions, and despite the left's identification with protectionist policies. To rationalize this response, we consider a new institutional channel for the political effects of trade shocks: the weakening of labor unions. We provide support for this mechanism in two steps. First, we show that union presence-proxied by the number of workers directly employed by unions, by union density, and by the number of union establishments-declined in regions that became more exposed to foreign competition. Second, we show that the negative effect of tariff reductions on the votes for the left was driven exclusively by political parties with historical links to unions. Furthermore, the impact of the trade liberalization on the vote share of these parties was significant only in regions that had unions operating before the reform. These findings are consistent with the hypothesis that tariff cuts reduced the vote share of the left partly through the weakening of labor unions. This institutional channel is fundamentally different from the individual-level responses, motivated by economic or identity concerns, that have been considered in the literature.
    Keywords: trade shocks; elections; unions; Brazil
    JEL: F13 D72 J51 F16 F14
    Date: 2021–11–17
  5. By: Ernst Fehr; Thomas Epper; Julien Senn
    Abstract: Increasing inequality and associated egalitarian sentiments have again put redistribution on the political agenda. Other-regarding preferences may also affect support for redistribution, but knowledge about their distribution in the broader population and how they are associated with political support for redistributive policies is still scarce. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributive policies in national plebiscites, to study the link between other-regarding preferences and support for redistribution in a broad sample of the Swiss population. We document that inequality aversion and altruistic concerns play a quantitatively large positive role in the support for redistribution, in particular for more affluent individuals. In addition, previously identified key motives underlying opposition to redistribution – such as the belief that effort is an important driver of individual success – play no role for selfish individuals but are highly relevant for altruistic and egalitarian individuals. Finally, while inequality averse individuals display strong support for policies that primarily aim at reducing the incomes of the rich, altruistic individuals are considerably less supportive of such policies. Thus, knowledge about the fundamental properties and the distribution of individuals’ other-regarding preferences also provides a deeper understanding about who is likely to support specific redistributive policies.
    Keywords: social preferences, altruism, inequality aversion, preference heterogeneity, demand for redistribution
    JEL: D31 D72 H23 H24
    Date: 2022
  6. By: Shuai Chen
    Abstract: This study examines whether the rally ‘round the flag phenomenon is present in the context of terrorist attacks, and investigates the explanations for the related increase of confidence in political institutions and political approval of the incumbent’s job performance. I exploit variations in terrorist occurrences and results across sub-national regions among EU countries from 2008 to 2016. I restrict the sample to only regions where at least one attack took place during the data period, in order to mitigate concerns over selectivity of terrorism in particular areas. I empirically show that both terrorism occurrence and its results (successful or failed attacks) are plausibly exogenous to the prior political and economic climate. Conducting a difference-in-differences analysis, I compare changes in political confidence and approval among individuals who were exposed to an attack in their region to those who were not. With another more sophisticated identification, I also compare such political changes after successful attacks to those after failed attacks of the same type. I find that post-terrorism, individual political confidence and support significantly increased by more than 10 percentage points, and that this political increment was 5 percentage points after successful attacks relative to failed ones. Furthermore, I explore various potential channels suggesting patriotism and civic engagement as mechanisms while rejecting perceived economic capture and political acquisition as alternative explanations. This paper first empirically analyzes the driver of the rally effect of terrorism by disentangling voluntary solidarity from economically or politically elicited solidarity.
    Keywords: Rally ‘round the flag effect, terrorism, confidence in institutions, political approval, patriotism, economic capture, political acquisition
    JEL: D74 H12 P16
    Date: 2022
  7. By: Fremerey, Melinda; Hörnig, Lukas; Schaffner, Sandra
    Abstract: We investigate the effect of the refugee inflow between 2014 and 2017 on voting for the far-right party Alternative for Germany (AfD) in the national parliamentary election in 2017 in Germany. Drawing on unique small-scale data enables us to distinguish between the contact theory, captured by the inflow of refugees into the immediate neighborhood (1km x 1km), and county-level (NUTS 3) effects, which might pick-up other, broader factors such as media coverage or specific county-level policies. We alleviate concerns of an endogenous refugee allocation by a shift-share instrument. Our results indicate that the contact theory is valid in urban West Germany, i. e., higher refugee inflows in West German urban neighborhoods decrease the shares of far-right voting, while there is no robust evidence of a relationship between refugee inflow and far-right vote shares in East Germany and rural West Germany.
    Keywords: voting behavior,neighborhood characteristics,refugees,immigration
    JEL: D72 J15 R23
    Date: 2022
  8. By: Colantone, Italo; Ottaviano, Gianmarco; Stanig, Piero
    Abstract: We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments' leaning and enacted policies. Using newly assembled data for 23 advanced democracies, we document a protectionist and isolationist shift in electorates, legislatures, and executives from the mid-1990s onwards. This is associated with a noticeable protectionist shift in trade policy - although with some notable nuances - especially since the financial crisis of 2008. We discuss the economics of the backlash. From a theoretical perspective, we highlight how the backlash may arise within standard trade models when taking into ac-count the 'social footprint' of globalization. Then, we review the empirical literature on the drivers of the backlash. Two main messages emerge from our analysis: (1) globalization is a significant driver of the backlash, by means of the distributional consequences entailed by rising trade exposure; yet (2) the backlash is only partly determined by trade. Technological change, crisis-driven fiscal austerity, immigration, and cultural concerns are found to play an important role in creating politically consequential cleavages. Looking ahead, we discuss possible future developments, with specific focus on the issue of social mobility.
    Keywords: globalization; protectionist and isolationist direction; 789049-MIMAT-ERC-2017-ADG
    JEL: J1
    Date: 2021–09–13
  9. By: Baker, Scott R. (Northwestern University); Davis, Steven J. (University of Chicago); Levy, Jeffrey A. (University of Chicago)
    Abstract: We quantify and study state-level economic policy uncertainty. Tapping digital archives for nearly 3,500 local newspapers, we construct three monthly indexes for each state: one that captures state and local sources of policy uncertainty (ΕPU-S), one that captures national and international sources (EPU-N), and a composite index that captures both. EPU-S rises around gubernatorial elections and own-state episodes like the California electricity crisis of 2000-01 and the Kansas tax experiment of 2012. EPU-N rises around presidential elections and in response to 9-11, Gulf Wars I and II, the 2011 debt-ceiling crisis, the 2012 fiscal cliff episode, and federal government shutdowns. Close elections elevate policy uncertainty much more than the average election. The COVID-19 pandemic drove huge increases in policy uncertainty and unemployment, more so in states with stricter government-mandated lockdowns. VAR models fit to pre-COVID data imply that upward shocks to own-state EPU foreshadow weaker economic activity in the state.
    Keywords: policy uncertainty, elections and uncertainty, COVID-19, state-level economic performance, unemployment
    JEL: D80 E66 G18 H70 R50
    Date: 2022–03
  10. By: Rodríguez-Pose, Andrés; Dijkstra, Lewis
    Abstract: Some regions in Europe that have been heavily supported by the European Union’s Cohesion Policy have recently opted for parties with a strong Eurosceptic orientation. The results at the ballot box have been put forward as evidence that Cohesion Policy is ineffective for tackling the rising, European-wide wave of discontent. However, the evidence to support this view is scarce and often contradictory. This paper analyses the link between Cohesion Policy and the vote for Eurosceptic parties. It uses the share of votes cast for Eurosceptic parties in more than 63,000 electoral districts in national legislative elections in the EU-28 to assess whether Cohesion Policy investment since the year 2000 has made a difference for the electoral support for parties opposed to European integration. The results indicate that Cohesion Policy investment is linked to a lower anti-EU vote. This result is robust to employing different econometric approaches, to considering the variety of European development funds, to different periods of investment, to different policy domains, to shifts in the unit of analysis and to different levels of opposition by parties to the European project.
    Keywords: anti-system voting; cohesion policy; elections; Europe; Euroscepticism; populism; regions
    JEL: D72 R11 R58
    Date: 2021–02–01
  11. By: Daniel L. Bennett; Christopher J. Boudreaux; Boris N. Nikolaev
    Abstract: Using institutional economic theory as our guiding framework, we develop a model to describe how populist discourse by a nation's political leader influences entrepreneurship. We hypothesize that populist discourse reduces entrepreneurship by creating regime uncertainty concerning the future stability of the institutional environment, resulting in entrepreneurs anticipating higher future transaction costs. Our model highlights two important factors that moderate the relationship. First, is the strength of political checks and balances, which we hypothesize weakens the negative relationship between populist discourse and entrepreneurship by providing entrepreneurs with greater confidence that the actions of a populist will be constrained. Second, the political ideology of the leader moderates the relationship between populist discourse and entrepreneurship. The anti-capitalistic rhetoric of left-wing populism will create greater regime uncertainty than right-wing populism, which is often accompanied by rhetoric critical of free trade and foreigners but also supportive of business interests. The effect of centrist populism, which is accompanied by a mix of contradictory and often moderate ideas that make it difficult to discern future transaction costs, will have a weaker negative effect on entrepreneurship than either left-wing or right-wing populism. We empirically test our model using a multi-level design and a dataset comprised of more than 780,000 individuals in 33 countries over the period 2002-2016. Our analysis largely supports our theory regarding the moderating role of ideology. Still, surprisingly, our findings suggest that the negative effect of populism on entrepreneurship is greater in nations with stronger checks and balances.
    Date: 2022–03
  12. By: Wiertz, Dingeman; Rodon, Toni
    Abstract: To what degree do people adjust their political ideology in response to job loss? To answer this question, we draw on Dutch panel data over the period 2007-2016, paying special attention to the potential moderating role of various personal circumstances. We find that, on average, job loss triggers a leftward ideological response. Although small in size, this shock effect persists when people remain unemployed or find new employment, yet in the longer run it wears off. Furthermore, we find that job loss prompts a bigger shift to the left when people are simultaneously confronted with a major drop in household income, when they have fewer financial resources to serve as a buffer, and when they are more pessimistic about the economy. While we also observe many people who revise their ideology to the right during our study window, these rightward shifts do not seem driven by job loss experiences.
    Keywords: Europe; political economy; ideology; political sociology; unemployment
    JEL: I38 J64
    Date: 2021–01–01
  13. By: Joël Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Yasmine Elkhateeb (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Cairo University); Mathilde Maurel (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique, FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: This paper investigates the impact of internet use as a means of accessing news on African citizens' demand for and perception of the supply of democracy. This question is addressed using cross-sectional data from the last three rounds of the Afrobarometer survey for a sample of 25 African countries between 2011 and 2018. Using an instrumental variable approach to control for the possible endogeneity bias between internet use and citizens' perceptions, we found that using the internet to get news has a negative and significant effect on the demand for and on the perceived supply of democracy. The negative effect is channeled through two main factors. The first factor is the confidence in governments and governmental institutions, which is undermined by the use of the internet. In particular, we find that this internet-induced lower confidence translates into a higher probability of engaging in street protests instead of increased political participation. The second driving factor is the (mis-)information channel. On the one hand, we show that internet users' perception of the supply of democracy negatively diverges from experts' ratings. On the other hand, we document further that internet use increases the likelihood of incoherence in the respondent's stance about her demand for democracy. Finally, we show that the negative effect we found is mitigated when the internet is complemented by traditional media sources, especially the radio, to get informed. The findings of this study suggest that internet use is not neutral and tends to undermine citizens' preferences for democracy and alter perceptions about the functioning of political institutions.
    Keywords: Internet news,democracy,Africa
    Date: 2022–03
  14. By: Rickard, Stephanie
    Abstract: AAlthough globalization and the world trade regime have reduced the significance of distance between countries, within countries, geography matters now more than ever. Inside countries’ borders, economic activities, such as production and employment, occur unevenly across space. As a result, international trade impacts parts of a country differently. Some areas benefit from rising trade, while others experience reductions in local wages and employment as a result of increased import competition. Because regions’ experience of globalization varies, public opinion about trade differs across geographic areas within countries. Voters living in regions advantaged by trade are likely to support economic openness, while voters living in regions negatively impacted by trade grow increasingly skeptical of the benefits of globalization. The geographic disparities in public attitudes towards trade often align with salient political cleavages. As a result, debates over trade have become increasingly polarized in many countries, which may threaten states’ continued economic openness and their engagement with, and even support for, the world trade regime.
    Keywords: CUP deal
    JEL: N0
    Date: 2022–01–26

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