nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒03‒06
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Works Councils and Workers' Party Preferences in Germany By Jirjahn, Uwe; Le, Thi Xuan Thu
  2. Political Campaigning, and Racial Discrimination in Arrests for Drugs. By Francesco Barilari; Diego Zambiasi
  3. Missing Discussions: Institutional Constraints in the Islamic Political Tradition By A. Arda Gitmez; James A. Robinson; Mehdi Shadmehr
  4. Who Thinks COVID-19 is not a Crisis? Need for Cognition and Political Ideology Influence Perceptions of the Severity of COVID-19 By Meerza, Syed Imran Ali; Brooks, Kathleen R.; Gustafson, Christopher R.; Yiannaka, Amalia
  5. Financial Crisis in a Socialist Setting: Impact on Political Behavior, Social Trust, and Economic Values By Ran Abramitzky; Netanel Ben-Porath; Victor Lavy; Michal Palgi
  6. Improving Public Understanding of Economic Statistics: Presenting Labour Market Statistics to the Public By Claire Cathro; Johnny Runge; Jordan Whitwell-Mak; Katharine Stockland; Nida Broughton; Jasmin Rostron
  7. New dawn fades: trade, labour and the Brexit exchange rate depreciation By Vieira Marques Da Costa, Rui; Dhingra, Swati; Machin, Stephen
  8. Young Politicians and Long-Term Policy By Dahis, Ricardo; de las Heras, Ivan; Saavedra, Santiago
  9. Does Economic Policy Uncertainty Encourage Gambling? Evidence from the Chinese Welfare Lottery Market By Can Xu; Andreas Steiner; Jakob de Haan
  10. Does income transparency affect support for redistribution? Evidence from Finland's tax day By Maurice Dunaiski; Janne Tukiainen

  1. By: Jirjahn, Uwe (University of Trier); Le, Thi Xuan Thu (University of Trier)
    Abstract: Research on the consequences of works councils has been dominated by economic aspects. Our study provides evidence that works councils have nonfinancial consequences for civic society that go beyond the narrow boundaries of the workplace. Using panel data from a large sample of male workers, the study shows that works councils have an influence on workers' party preferences. The presence of a works council is negatively associated with preferences for extreme right-wing parties and positively associated with preferences for the Social Democratic Party and The Left. These results holds in panel data estimations including a large set of controls and accounting for unobserved individual-specific factors. Our findings fit the notion that workplace democracy increases workers' generalized solidarity and their awareness of social and political issues.
    Keywords: workplace democracy, worker participation, political spillover, party identification
    JEL: D72 J51 J52 J58
    Date: 2023–01
  2. By: Francesco Barilari (Trinity College Dublin); Diego Zambiasi (Newcastle University)
    Abstract: In this paper we show that political campaigning can influence the behavior of law enforcement officers. We follow monthly arrests for 1383 police agencies in 40 American States from January 1984 to December 1990. During these years the Presidents of the United States developed a strong rhetoric against drug abuse. The main target of the presidential rhetoric was crack cocaine, a drug that the media associated with Blacks. We implement both a difference in differences and a reduced-form-Bartik-type approach to test if exposure to the presidential rhetoric affected the behavior of law enforcement officers. We generate a novel measure of the intensity of the presidential rhetoric against drug abuse by running a topic modelling analysis of all the public papers of Presidents Reagan and Bush. We find that arrests for crack cocaine of Blacks increased more in counties more exposed to the presidential rhetoric against drug abuse --even when accounting for state specific policies and baseline differences in county characteristics--, while we find no effect for Whites. We find qualitatively similar results when considering the effect of Reagan's political rallies.
    Keywords: Crackcocaine, Politicalcampaigning, Racialdiscrimination
    JEL: D72 J15 K42 P00
    Date: 2023–02
  3. By: A. Arda Gitmez; James A. Robinson; Mehdi Shadmehr
    Abstract: Institutional constraints to counter potential abuses in the use of political power have been viewed as essential to well functioning political institutions and good public policy outcomes in the Western World since the time of ancient Greece. A sophisticated intellectual tradition emerged to justify the need for such constraints. In this paper we identify a new puzzle: such an intellectual tradition did not exist in the Islamic world, even if the potential for abuse was recognized. We develop a model to explain why such ideas might not have emerged. We argue that this is due to the nature of Islamic law (the Sharia) being far more encompassing than Western law, making it easier for citizens to identify abuses of power and use collective action to discipline them. We study how the relative homogeneity and solidarity of Islamic society fortified this logic.
    JEL: D70 D72 D78 H11
    Date: 2023–02
  4. By: Meerza, Syed Imran Ali; Brooks, Kathleen R.; Gustafson, Christopher R. (University of Nebraska-Lincoln); Yiannaka, Amalia
    Abstract: The main objective of this study is to identify the role of the need for cognition (NFC) and political ideology in shaping perceptions of the severity of the COVID-19 pandemic using survey data collected from 1, 223 individuals in the United States. Our results suggest that participants with a high NFC are more likely to perceive COVID-19 as a crisis than respondents with a low NFC. Moreover, empirical results indicate that conservatism is related to perceiving the COVID-19 pandemic as less severe. Specifically, individuals on the ‘right’ of the political spectrum (i.e., conservative) were less likely to perceive the COVID-19 pandemic as a crisis than individuals on the ‘left’ of the political spectrum (i.e., liberal). Overall, study findings show the psychological and political roots of individual differences in perceptions of the severity of the pandemic.
    Date: 2023–02–02
  5. By: Ran Abramitzky; Netanel Ben-Porath; Victor Lavy; Michal Palgi
    Abstract: Research on the political and social impacts of financial crises has focused chiefly on free market economies, hindering our understanding of their effects in other settings. We exploit an episode of a financial crisis that hit the Israeli kibbutzim to study its impact in a socialist context. Contrary to findings in capitalistic economies, the crisis led to increased support of liberalized labor markets and reduced support for leftist political parties. These effects persisted in the long run, especially among the young. The crisis also reduced trust in leadership, but trust was restored shortly after agreements to settle the debt were signed, relieving the severity of the crisis. Our findings suggest that economic shocks may have different effects in a free market and socialist systems, in both cases leading individuals to question their current system.
    JEL: J0 P00
    Date: 2023–02
  6. By: Claire Cathro; Johnny Runge; Jordan Whitwell-Mak; Katharine Stockland; Nida Broughton; Jasmin Rostron
    Abstract: Previous research has found that the UK public feel economics and economic statistics are communicated in a way that is difficult to understand. Producers of economic statistics primarily write for technical audiences, such as policy makers and economists, and not the general public. This research therefore explores how the Office for National Statistics (ONS) could potentially communicate statistics about the labour market directly to the general population, with the aim to improve public comprehension, engagement, and trust. We developed alternative versions of the ONS Labour Market Overview, a summary of the latest labour market statistics released monthly on the ONS website, that were designed to be easier to read and understand for non-technical audiences. We then tested these summaries with the general public through an online randomised controlled trial (RCT) with 3, 849 adults from across the UK in January and February 2022. We found that the alternative summaries outperformed the control version on comprehension, engagement and trust. These results show that relatively small changes to how the statistics are presented or discussed can result in improvements in public comprehension of, engagement with, and trust in economic statistics - all critical outcomes for a national statistical agency like the ONS.
    Keywords: Communication, trust in statistics, public understanding, economic statistics
    JEL: D83 D90 C91
    Date: 2022–11
  7. By: Vieira Marques Da Costa, Rui; Dhingra, Swati; Machin, Stephen
    Abstract: This paper studies consequences of the very large exchange rate depreciation occurring in June 2016 due to the UK electorate unexpectedly voting to leave the European Union. As news of a leave vote came in, the value of sterling plummeted, recording the biggest one day depreciation of any of the world’s four major currencies since the collapse of Bretton Woods. The prospect of Brexit really happening generated sizable differences in how much sterling depreciated against different currencies. Coupled with pre-referendum cross-country trade patterns, this generated variations in exchange rate depreciations facing businesses in different industries. The paper first considers revenue and cost channels operating through trade price responses, offering evidence of a cost shock from the price of intermediate imports rising by more in higher depreciation industries, but with no revenue offset from exports. Workers were impacted by the increased cost pressures facing businesses, not in terms of job loss but through relative real wage declines and stagnation for workers employed in industries facing larger depreciations.
    Keywords: Brexit; exchange rate depreciation; trade prices; labour outcomes
    JEL: J68 L52 P25
    Date: 2022–12–07
  8. By: Dahis, Ricardo; de las Heras, Ivan; Saavedra, Santiago
    Abstract: A fundamental difficulty in policy-making is that policies often have costs today but benefits far into the future. This difficulty is particularly salient to climate change and environmental conservation policy. A critical dimension in this trade-off is the age of politicians, which impacts their life expectancy, career concerns, and what education they received. We study this trade-off in the case of Brazilian mayors and environmental outcomes, using a regression discontinuity design for close elections. We find that when a young politician is elected, there is a reduction in deforestation and greenhouse gas emissions, without significant effects on municipal gross domestic product. Young politicians allocate more spending to education and reducing liabilities, suggesting that the time horizon is important. Our study of mechanisms suggests young mayors matter because they belong to a new cohort, not because of age per se.
    Keywords: Deforestation; Politicans' Age
    JEL: P18 Q23 Q54
    Date: 2023–02
  9. By: Can Xu; Andreas Steiner; Jakob de Haan
    Abstract: This paper investigates the effect of economic policy uncertainty (EPU) on gambling activity in China. Based on a theoretical model, we hypothesize that EPU increases the demand for hope which raises the willingness to pay for lottery tickets, resulting in higher lottery sales. We estimate a Panel Autoregressive Distributed Lag model with an Error-Correction form using data on lottery sales in Chinese provinces to estimate the short- and long-run effect of EPU on gambling. Our results suggest that EPU has a significant positive effect on gambling in the short run. In addition, we find that this positive effect is less persistent if the EPU proxy is based on economic policy reports in national newspapers than when the EPU measure is derived from local newspaper reports. This may be explained by the different thematic focus and the different degrees of media censorship of national and local newspapers.
    Keywords: economic policy uncertainty, household behaviour under uncertainty, gambling behaviour, welfare lottery, China
    JEL: D12 D81 D91 G41 L83
    Date: 2023
  10. By: Maurice Dunaiski (UNODC Research); Janne Tukiainen (Department of Economics, University of Turku.)
    Abstract: This paper examines whether income transparency - the public release of citizens' income information - affects support for redistribution. We leverage a quasi-experiment in Finland, where every year on the so-called tax day, the authorities release income information on Finland's top earners to the public. To identify causal effects we compare respondents who took part in the European Social Survey shortly before and after the event. We find that the tax day increases perceptions that earnings of the top 10% are unfair, but that public support for redistribution remains largely unaffected. A notable exception are top earners, who decrease their support for redistribution, and young people, who increase their support for redistribution. Our results highlight the scope conditions of previous experimental studies, and suggest that increasing exposure to inequality through a real-world policy, rather than experimental treatments, may trigger only marginal changes in support for redistribution.
    Keywords: income transparency, inequality, redistribution, taxes
    JEL: D31 D63 D72 D80 H20 H23 H24 H31
    Date: 2023–02

This nep-pol issue is ©2023 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.