nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒09‒12
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. The politics of policy reform: experimental evidence from Liberia By Wayne Aaron Sandholtz
  2. Preferences over Taxation of High-Income Individuals: Evidence from a Survey Experiment By Engelmann, Dirk; Janeba, Eckhard; Mechtenberg, Lydia; Wehrhafter, Nils
  3. Are Immigrants More Left-Leaning than Natives? By Simone Moriconi; Giovanni Peri; Riccardo Turati
  4. When the Left gets it Right: landslide victories in the U.S. presidential and Kosovo parliamentary elections By Mulaj, Isa; Matoshi, Ruzhdi
  5. Church and State in historical political economy By Becker, Sascha O; Pfaff, Steven
  6. Gallup Democracy in Exercising the NATO Membership Option: The Cases of Finland and Sweden By Vesa Kanniainen
  7. Trade Shocks, Labor Markets and Elections in the First Globalization By Bräuer, Richard; Hungerland, Wolf-Fabian; Kersting, Felix
  8. In the Grip of Whitehall? The Effects of Party Control on Local Fiscal Policy in the UK By Lockwood, Benjamin; Porcelli, Francesco; Rockey, James
  9. Analyzing the impacts of socio-economic factors on French departmental elections with CoDa methods By Thi-Huong-An Nguyen; Thibault Laurent; Christine Thomas-Agnan; Anne Ruiz-Gazen
  10. Regional deprivation and populism: Evidence from Germany and the U.S. By Bayerlein, Michael
  11. The Political Economy of the Decline of Antitrust Enforcement in the United States By Filippo Lancieri; Eric A. Posner; Luigi Zingales
  12. Regret-Free Truth-Telling Voting Rules By R. Pablo Arribillaga; Agustín G. Bonifacio; Marcelo A. Fernandez
  13. Potterian Economics By Daniel Levy; Avichai Snir

  1. By: Wayne Aaron Sandholtz
    Abstract: Public service reform often entails broad benefits for society and concentrated costs for interest groups. Do the electoral benefits outweigh the costs for politicians who implement reform? This paper examines the electoral effects of a randomized Liberian school reform which increased student learning but antagonized teachers. The policy reduced ruling party vote share by 3 percentage points (10%). It also reduced teachers’ job satisfaction by 0.18s and political involvement by 0.22s. I use the evaluation’s pairwise randomization to show that the effect on vote share was positively correlated with student learning, and negatively correlated with teacher political disengagement.
    Keywords: Electoral returns, Policy feedback, Public service delivery, Policy experimentation, Education, Political economy, Elections, Randomized controlled trial, Liberia, Information
    JEL: O10 C93 D72 P16 H41 I25
    Date: 2022
  2. By: Engelmann, Dirk (HU Berlin); Janeba, Eckhard (University of Mannheim); Mechtenberg, Lydia (University of Hamburg); Wehrhafter, Nils (Deutsche Bundesbank)
    Abstract: Mobility of high-income individuals across borders puts pressure on governments to lower taxes. A central tenet of the corresponding textbook argument is that mobile individuals react to tax differentials through migration, and in turn immobile individuals vote for lower taxes. We investigate to which extent this argument is complete. In particular, political ideology may influence voting on taxes. We vary mobility and foreign taxes in a survey experiment within the German Internet Panel (GIP), with more than 3,000 individuals participating. We find that while the treatment effects qualitatively confirm model predictions how voters take mobility of high-income earners into account when choosing domestic taxes, ideology matters: left-leaning high-income individuals choose higher taxes and emigrate less frequently than right-leaning ones. These findings are in line with the comparative- static predictions of a simple model of inequality aversion when the aversion parameters vary with ideology.
    Keywords: taxation; mobility; ideology; survey experiments;
    JEL: D72 F22 H21
    Date: 2021–10–17
  3. By: Simone Moriconi; Giovanni Peri; Riccardo Turati
    Abstract: We analyze whether second generation immigrants have different political preferences relative to observationally identical host country’s citizens. Using data on individual voting behavior in 22 European countries between 2001 and 2017 we characterize each vote on a left-right scale using ideological and policy position of the party from the Manifesto Project Database. In the first part of the paper we characterize the size of the "left-bias" in the vote of second generation immigrants, after controlling for a large set of individual characteristics and origin and destination country unobservable factors. We find a significant left-bias of second generation migrants relative to observationally identical natives, similar in magnitude to the association between left-bias and secondary education, or living in urban areas. We then show that this left-bias associates with stronger preferences for government intervention to reduce economic inequality, and for internationalism and multiculturalism.
    Keywords: immigration, elections, Europe
    JEL: D72 J61 P16 Z10
    Date: 2022
  4. By: Mulaj, Isa; Matoshi, Ruzhdi
    Abstract: In politics and political economy, the question of supporting the right or the left ideology has come to the judgment of what actually should be done to get rid of something and push for better needed changes rather than being a kind of shaped or consistent ideologist. The November, 2020 U.S. presidential and the February, 2021 Kosovo general parliamentary elections provide an interconnected experience. With his unpredictable foreign policy juxtaposed to the slogan “America First” and “Make America Great Again”, the U.S. 45th President, the right-wing Donald Trump, pursued an isolationist, non-interventionist, and protectionist agenda. On October 4, 2019, he appointed the U.S. ambassador to Germany, Richard Grenell, as a special envoy to broker the talks between Kosovo and Serbia. Grenell saw his efforts not compatible with the left-wing Prime Minister (PM) of Kosovo, Albin Kurti who was toppled out of power on March 25, 2020, by a no-confidence vote motion of over 2/3 members of the Kosovo Assembly. The Kurti caretaker government continued until June 03 when it was replaced by Avdullah Hoti as PM. On September 4, 2021, the U.S. President brokered the talks between Kosovo and Serbia at the White House in signing the agreement for their economic normalization. Many sought it as an attempt by the Trump administration to make an achievement in foreign policy before the U.S. presidential elections. Donald Trump lost to the left-wing Joe Biden. The wind of the left for a massive change followed in Kosovo on February 14, 2021, when Albin Kurti’s party won over 50% of parliamentary votes. This paper demonstrates how the left is now left not to turn right but to get the right things to do, in the U.S. as well as in Kosovo, and did the Covid-19 played a role in the outcome?
    Keywords: politics, left-right, foreign policy, migration, elections, economics
    JEL: F63 H11 P16
    Date: 2021–07–07
  5. By: Becker, Sascha O (Monash U and U Warwick); Pfaff, Steven (University of Washington)
    Abstract: Over many centuries, church and state have grown together, and apart. Sometimes linked like Siamese twins, sometimes in conflict with each other. This chapter discusses the major themes in the literature on church and state, some of the findings in the political economy of religion, and evaluates emerging directions in research on church-state relations.
    Keywords: Church ; State ; Secularization ; Political Economy ; Deregulation
    Date: 2022
  6. By: Vesa Kanniainen
    Abstract: The paper asks whether the exercising of the NATO membership option is justified for Finland and Sweden in the light of their geopolitical state after Russia’s attack on Ukraine. It was the Gallup democracy, which launched the political moves towards the membership. In both countries, the majority of people turned to favor the membership within 2-3 months. Finland activated first. Sweden was fast in catching up with the Finnish process. The theory of option pricing is employed to analyze the optimal timing of exercising the option when the uncertainty regarding the value of the membership is rapidly diluting. The Turkish intervention in the membership process after the membership applications of Finland and Sweden were delivered suggests a bargaining phase once the application is delivered. Finally, the effects of the Gallup surveys on the political equilibrium are analyzed in a voter-politician model.
    Keywords: Gallup democracy, defense alliance, option value of membership
    JEL: D72 D74 H56
    Date: 2022
  7. By: Bräuer, Richard (Halle Institute for Economic Research and VU Amsterdam); Hungerland, Wolf-Fabian (Federal Ministry of Economic Affairs and Energy, Berlin); Kersting, Felix (HU Berlin)
    Abstract: This paper studies the economic and political effects of a large trade shock in agriculture – the grain invasion from the Americas – in Prussia during the first globalization (1871-1913). We show that this shock accelerated the structural change in the Prussian economy through migration of workers to booming cities. In contrast to studies using today’s data, we do not observe declining per capita income, health outcomes or political polarization in counties aected by foreign competition. Our results suggest that the negative and persistent eects of trade shocks we see today are not a universal feature of globalization, but depend on labor mobility. For our analysis, we digitize data from Prussian industrial and agricultural censuses on the county level and combine it with national trade data at the product level. We exploit the cross-regional variation in cultivated crops within Prussia and instrument with Italian trade data to isolate exogenous variation.
    Keywords: globalization; import competition; labor market; elections; agriculture; migration; trade shock;
    JEL: F14 F16 F66 F68 N13 R12
    Date: 2021–10–17
  8. By: Lockwood, Benjamin (University of Warwick); Porcelli, Francesco (University of Bari); Rockey, James (University of Birmingham)
    Abstract: This paper uses an instrumental variable approach based on close elections to evaluate the effect of political parties on local fiscal policy in England and Wales over the period 1998-2015. Our main finding is that political control of the council (by Labour, Conservative, or Liberal Democrat parties) has no effect on total current expenditure, the composition of that expenditure, the property tax rate (council tax per band D property) and total council tax revenue. We find the same null results for capital expenditure, debt, and authorized debt limits. Thus, our results confirm the widely expressed belief that centrally imposed constraints on local government fiscal policy (rate-capping, and more recently, compulsory referenda, and the Prudential Code for borrowing) hold local government fiscal policy in a tight grip.
    Keywords: Party Control ; Grants ; Government Spending ; Taxation JEL Codes: H70 ; H71 ; D72
    Date: 2022
  9. By: Thi-Huong-An Nguyen (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Thibault Laurent (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Christine Thomas-Agnan (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Anne Ruiz-Gazen (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: The vote shares by party on a given subdivision of a territory form a vector called composition (mathematically, a vector belonging to a simplex). It is interesting to model these shares and study the impact of the characteristics of the territorial units on the outcome of the elections. In the political economy literature, few regression models are adapted to the case of more than two political parties. In the statistical literature, there are regression models adapted to share vectors including Compositional Data (CoDa) models, but also Dirichlet models, and others. Our goal is to discuss and illustrate the use CoDa regression models for political economy models for more than two parties. The models are fitted on French electoral data of the 2015 departmental elections.
    Keywords: Political economy,Compositional regression models,Multiparty,Vote shares,French departmental election,Gaussian distribution
    Date: 2022
  10. By: Bayerlein, Michael
    Abstract: A widely held view is that increasing globalisation and inequality are fostering support for populist actors. Surprisingly, when focusing on Germany and the U.S., populist voting is highest in less globalised regions with rather equal income distributions. Addressing this puzzle, I ask how the regional variance in populist voting can be explained. In my answer, I introduce the concept of spatial inequality, which describes the regional inequality within countries, and construct a measure of public goods scarcity. I argue that the spatial inequality induced feeling of being left behind is positively correlated with populist voting and that this effect is mitigated by public goods provision. Using county level data to develop spatial inequality and public good scarcity indices, I can provide empirical support for these arguments. The findings have important implications for understanding the sub-national variance in populist voting and the role of relative economic deprivation as well as public goods provision.
    Keywords: Populism,Voting Behaviour,Inequality,Public Goods,Regional Economics
    JEL: D31 D63 D72 H41 R11
    Date: 2022
  11. By: Filippo Lancieri; Eric A. Posner; Luigi Zingales
    Abstract: Antitrust enforcement in the United States has declined since the 1960s. Building on several new datasets, we argue that this decline did not reflect a popular demand for weaker enforcement or any other kind of democratic sanction. The decline was engineered by unelected regulators and judges who, with a few exceptions, did not express skepticism about antitrust law in confirmation hearings. We find little evidence that academic ideas played an important role in the decline of antitrust enforcement except where they coincided with the interests of big business, which appears to have exercised influence behind the scenes.
    JEL: K21 L40 P16
    Date: 2022–08
  12. By: R. Pablo Arribillaga (Universidad Nacional de San Luis/CONICET); Agustín G. Bonifacio (Universidad Nacional de San Luis/CONICET); Marcelo A. Fernandez (Johns Hopkins University)
    Abstract: We study the implications of regret-free truth-telling for voting rules. Regretfreeness, a weakening of strategy-proofness, provides incentives to report preferences truthfully if agents want to avoid regret. We first show that for tops-only rules regret-freeness is equivalent to strategy-proofness. Then, we focus on three families of (non-tops-only) voting methods: maxmin, scoring, and Condorcet consistent ones. We show positive and negative results for both neutral and anonymous versions of maxmin and scoring rules. We also show that Condorcet consistent rules that satisfy a mild monotonicity requirement are not regret-free, and neither are successive elimination rules. Furthermore, we provide full characterizations for the case of three alternatives and two agents.
    Keywords: Strategy-proofness, Regret-freeness, Voting Rules, Social Choice
    JEL: D71
    Date: 2022–08
  13. By: Daniel Levy (Bar-Ilan University [Israël], Emory University [Atlanta, GA], ISET - International School of Economics at TSU, RCEA - Rimini Center for Economic Analysis, International Centre for Economic Analysis); Avichai Snir (Bar-Ilan University [Israël])
    Abstract: Abstract Recent studies in psychology and neuroscience offer systematic evidence that fictional works exert a surprisingly strong influence on readers and have the power to shape their opinions and worldviews. Building on these findings, we study ‘Potterian economics', the economic ideas, insights, and structure, found in Harry Potter books, to assess how the books might affect economic literacy. A conservative estimate suggests that more than 7.3% of the world's population has read the Harry Potter books, and millions more have seen their movie adaptations. These extraordinary figures underscore the importance of the messages the books convey. We explore the Potterian economic model and compare it to professional economic models to assess the consistency of the Potterian economic principles with the existing economic models. We find that some of the principles of Potterian economics are consistent with economists' models. Many other principles, however, are distorted and contain numerous inaccuracies, contradicting professional economists' views and insights. We conclude that Potterian economics can teach us about the formation and dissemination of folk economics—the intuitive notions of naïve individuals who see market transactions as a zero-sum game, who care about distribution but fail to understand incentives and efficiency, and who think of prices as allocating wealth but not resources or their efficient use.
    Keywords: Popular opinion,Potterian economy,Harry Potter,Economic and financial literacy,Folk economics,Social organization of economic activity,Political economy,Public choice
    Date: 2022–07–19

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