nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒06‒27
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voting under threat: evidence from the 2020 French local elections By Elsa Leromain; Gonzague Vannoorenberghe
  2. Immigration and electoral outcomes: Evidence from the 2015 refugee inflow to Germany By Julia Bredtmann
  3. Voting on a Trade Agreement: Firm Networks and Attitudes Toward Openness By Diana Van Patten; Esteban Méndez
  4. On the Political Economy of Nonlinear Income Taxation By Berliant, Marcus; Gouveia, Miguel
  5. Polarization and Quid Pro Quo: The Role of Party Cohesiveness By Ratul Das Chaudhury; C. Matthew Leister; Birendra Rai
  6. Small Campaign Donors By Laurent Bouton; Julia Cagé; Edgard Dewitte; Vincent Pons
  7. Hindsight Bias and Trust in Government: Evidence from the United States By Herz, Holger; Kistler, Deborah; Zehnder, Christian; Zihlmann, Christian
  8. Political Legitimacy in Historical Political Economy By Avner Greif; Jared Rubin
  9. Expecting Brexit By Swati Dhingra; Thomas Sampson
  10. Hedging bets; British business lobbying in the European Union post-Brexit By Coen, David; Katsaitis, Alexander

  1. By: Elsa Leromain; Gonzague Vannoorenberghe
    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
    Date: 2021–07–30
  2. By: Julia Bredtmann
    Abstract: This paper investigates the effects of local exposure to refugees on electoral outcomes in the 2016 state election in Germany. Based on quasi-random variation in the allocation of refugees across municipalities and unique data on refugee populations and their type of accommodation, I find that an increase in the population share of refugees increases the vote share of right-wing parties and decreases the vote share of the incumbent federal government parties. The electoral effects, however, are solely driven by refugees living in centralized accommodation, while no such effects are found for refugees living in decentralized accommodation. These findings have important implications for the design of public policies in handling future receptions of refugees, as they reveal that an earlier transfer of refugees from centralized to decentralized accommodation could attenuate a growing support for right-wing parties.
    Keywords: Immigration, refugees, political economy, voting
    JEL: D72 F22 J15 R23
    Date: 2022–06
  3. By: Diana Van Patten; Esteban Méndez
    Abstract: We exploit a natural experiment to study the extent to which popular attitudes toward trade are driven by economic fundamentals. In 2007, Costa Rica put a free trade agreement (FTA) to a national referendum. With a single question on the ballot, 59% of Costa Rican adult citizens cast a vote on whether they wanted an FTA with the United States to be ratified, or not. We merge disaggregated referendum results with employer-employee data, customs and balance-sheet data, firm-to-firm transactions data, and data on household composition and expenditures. We document that a firm's exposure to the FTA, directly and via input-output linkages, significantly influences the voting behavior of its employees. This effect is greater for voters who are aligned with pro-FTA political candidates. We find that import competition plays a role in explaining votes against openness, and that within-industry heterogeneity is key in explaining votes, as compared with sector-level exposure. We also show that citizens considered the expected decrease in consumer prices when exercising their vote.
    JEL: D72 F13 F14 F68 O24
    Date: 2022–05
  4. By: Berliant, Marcus; Gouveia, Miguel
    Abstract: The literatures dealing with voting, optimal income taxation, implementation, and pure public goods are drawn on here to address the problem of voting over income taxes and a public good. In contrast with previous articles, general nonlinear income taxes that affect the labor-leisure decisions of consumers who work and vote are allowed. Uncertainty plays an important role in that the government does not know the true realizations of the abilities of consumers drawn from a known distribution, but must meet the realization-dependent budget; the tax system must be robust. Even though the space of alternatives is infinite dimensional, conditions on primitives are found to assure existence of a majority rule equilibrium when agents vote over both a public good and income taxes to finance it.
    Keywords: Voting; Income taxation; Public good; Robustness
    JEL: D72 D82 H21 H41
    Date: 2022–05–20
  5. By: Ratul Das Chaudhury; C. Matthew Leister; Birendra Rai
    Abstract: When can an interest group exploit ideological and affective polarization between political parties to its advantage? We study a model where an interest group credibly promises payments to legislators conditional on voting for its favored policy. Legislators value voting as their friends within their party, and suffer an ideological-disutility upon voting against their party's ideologically preferred policy. Affective polarization, owing to its interpersonal nature, is modeled by assuming a legislator values distinguishing her voting decision from legislators in the opposite party. Our main finding is that an aggregate measure of relative cohesiveness of social networks in the two parties determines whether the interest group can profitably exploit increasing polarization. However, the significance of relative cohesiveness vanishes if there is no ideological polarization between the two parties.
    Date: 2022–05
  6. By: Laurent Bouton; Julia Cagé; Edgard Dewitte; Vincent Pons
    Abstract: We study the characteristics and behavior of small campaign donors and compare them to large donors by building a dataset including all the 340 million individual contributions reported to the U.S. Federal Election Commission between 2005 and 2020. Thanks to the reporting requirements of online fundraising platforms first used by Democrats (ActBlue) and now Republicans (WinRed), we observe contribution-level information on the vast majority of small donations. We first show that the number of small donors (donors who do not give more than $200 to any committee during a two-year electoral cycle) and their total contributions have been growing rapidly. Second, small donors include more women and more ethnic minorities than large donors, but their geographical distribution does not differ much. Third, using a saturated fixed effects model, we find that race closeness, candidate ideological extremeness, whether candidates and donors live in the same district or state, and whether they have the same ethnicity increase contributions, with lower effects for small donors. Finally, we show that campaign TV ads affect the number and size of contributions to congressional candidates, particularly for small donors, indicating that pull factors are relevant to explain their behavior.
    JEL: D72 M37 P16
    Date: 2022–05
  7. By: Herz, Holger; Kistler, Deborah (ETH Zurich); Zehnder, Christian (Université de Lausanne); Zihlmann, Christian
    Abstract: We empirically assess whether hindsight bias has consequences on how citizens evaluate their political actors. Using an incentivized elicitation technique, we demonstrate that people systematically misremember their past policy preferences regarding how to best fight the Covid-19 pandemic. At the peak of the first wave in the United States, the average respondent mistakenly believes they supported significantly stricter restrictions at the onset of the first wave than they actually did. Exogenous variation in the extent of hindsight bias, induced through random assignment to survey structures, allows us to show that hindsight bias causally reduces trust in government.
    Keywords: Hindsight bias; Trust in Government; Evaluation distortion; Biased Beliefs
    JEL: D72 D83 D91
    Date: 2022–06–03
  8. By: Avner Greif (Stanford University); Jared Rubin (Chapman University)
    Abstract: Political legitimacy has long been recognized in the social sciences as an integral component of governance. It encourages obedience without the threat of force, thus lowering governing costs and improving the efficacy of policies. This chapter begins by overviewing the extensive literature on political legitimacy, classifying studies by whether they are based on the beliefs (regarding the legitimacy of the authority) or effectiveness (good governance is legitimate governance). Among the studies focusing on beliefs, most take legitimacy as an exogenous element of political authority. We develop a conceptual framework to study how beliefs regarding political legitimacy form endogenously and impact political power, institutions, and policies. We conclude with numerous examples from historical political economy that reveal the usefulness of this framework.
    Keywords: political legitimacy; beliefs; endogenous legitimacy; legitimacy principle
    JEL: B15 H11 N30 N40 N43 Z1
    Date: 2022
  9. By: Swati Dhingra; Thomas Sampson
    Abstract: The Brexit vote precipitated the unravelling of the UK's membership of the world's deepest economic integration agreement. This paper reviews evidence on the realized economic effects of Brexit. The 2016 Brexit referendum changed expectations about future UK-EU relations. Studying its consequences provides new insights regarding the economic impacts of news and uncertainty shocks. Voting for Brexit had large negative effects on the UK economy between 2016 and 2019, leading to higher import and consumer prices, lower investment, and slower real wage and GDP growth. However, at the aggregate level, there was little or no trade diversion away from the EU, implying that many of the anticipated long-run effects of Brexit did not materialize before the new UK-EU trade relationship came into force in 2021.
    Keywords: Brexit, UK economy, import prices, consumer prices
    Date: 2022–12
  10. By: Coen, David; Katsaitis, Alexander
    Abstract: In Brexit's aftermath, appreciating how UK business will interact with Brussels is vital to understanding the mechanics of future economic and trade relations. Drawing from work on corporate political activity, the article outlines changes that UK business lobbying faces in Brussels post-Brexit, focussing on three key aspects: (i) changes at the institutional-systemic level; (ii) variance across policy fields; (iii) engagement with other organisations. The article discusses potential strategic responses for UK business and argues that lobbying for UK private interests will become a costlier and more complicated enterprise. While policy making access via political doors will become harder, demand for reliable technical expertise allows UK business to maintain its presence and influence in regulatory policy areas. Targeted lobbying and diversified mobilisation offer the safest way forward for UK business lobbying in Brussels.
    Keywords: Brexit; business; corporate political activity; European Union; interest groups; lobbying
    JEL: L81
    Date: 2022–04–15

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