nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒10‒09
sixteen papers chosen by
Eugene Beaulieu, University of Calgary

  1. The Politics of Public Service Reform: Experimental Evidence from Liberia By Wayne Aaron Sandholtz
  2. Information Aggregation with Delegation of Votes By Dhillon, Amrita; Kotsialou, Grammateia; Ravindran, Dilip; Xefteris, Dimitrios
  3. Issue salience and women’s electoral performance: Theory and evidence from Google trends By Michela Cella; Elena Manzoni; Francesco Scervini
  4. Minimum Wages and Voting: Assessing the Political Returns to Redistribution outside the Tax System By Huet-Vaughn, Emiliano
  5. Partisan Alignment, Insurgency and Public Safety: Evidence from the Indian Red-corridor By Ashani Amarasinghe; Pushkar Maitra; Yuchen Zhongs
  6. Ethnic conflict: the role of ethnic representation By Bhalotra, Sonia; Clots-Figueras, Irma; Iyer, Lakshmi
  7. The Political Effects of the 1918 Influenza Pandemic in Weimar Germany By Bauernschuster, Stefan; Blum, Matthias; Hornung, Erik; Koenig, Christoph
  8. Protests, Long-term Preferences, and Populism. Evidence from 1968 in Europe By Fazio, Andrea
  9. Replication of Hamel & Wilcox-Archuleta (2022): "Black Workers in White Places: Daytime Racial Diversity and White Public Opinion" By Gretton, Jeremy; Roemer, Tobias; Schlüter, Elmar
  10. Voting Choice By Andrey Malenko; Nadya Malenko
  11. Populism in the liberal democracies of East Asia: South Korea, Japan, and Taiwan By Mosler, Hannes B. (Ed.)
  12. The Sudan Syndrome: State-Society Contests and The Future of Democracy After The December 2018 Revolution By Ibrahim Elbadawi; Alzaki Alhelo
  13. Do you really believe that? The effect of economic incentives on the acceptance of real-world data in a polarized context By Farjam, Mike; Bravo, Giangiacomo
  14. Protests By Davide Cantoni; Andrew Kao; David Y. Yang; Noam Yuchtman
  15. Freedom of Expression and Social Conflict By Bjørnskov, Christian; Mchangama, Jacob
  16. The politics of profits: Profit squeeze and political-economic change in Sweden, 1975–1985 By Bengtsson, Erik

  1. By: Wayne Aaron Sandholtz
    Abstract: This paper provides experimental evidence on the electoral effect of a large education reform in a developing democracy. Despite significantly improving school quality, the policy reduced the incumbent party’s presidential vote share by 3 percentage points (10%). This does not imply that voters fundamentally oppose service improvements: household surveys showed strong support for the policy, and variation in school-pair-level treatment effects shows that the more the policy raised test scores, the more it increased incumbent vote share. Instead, the negative average electoral effect was driven by opposition from teachers. The policy reduced teachers’ job satisfaction, their support for the incumbent government, and their political engagement. The more the policy reduced teacher political engagement, the more it reduced incumbent vote share. Counterfactual simulations suggest that relatively small improvements in effectiveness and/or teacher engagement could have made the policy a net vote winner. This paper empirically demonstrates the importance of political feasibility in the design of public service reforms.
    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: 2023
  2. By: Dhillon, Amrita (King’s College, London); Kotsialou, Grammateia (London School of Economics); Ravindran, Dilip (Humboldt University of Berlin); Xefteris, Dimitrios (University of Cyprus)
    Abstract: Liquid democracy is a system that combines aspects of direct democracy and representative democracy by allowing voters to either vote directly themselves, or delegate their votes to others. In this paper we study the information aggregation properties of liquid democracy in a setting with heterogeneously informed truth-seeking voters—who want the election outcome to match an underlying state of the world—and partisan voters. We establish that liquid democracy admits equilibria which improve welfare and information aggregation over direct and representative democracy when voters’ preferences and information precisions are publicly or privately known. Liquid democracy also admits equilibria which do worse than the other two systems. We discuss features of efficient and inefficient equilibria and provide conditions under which voters can more easily coordinate on the efficient equilibria in liquid democracy than the other two systems.
    Keywords: Liquid democracy, delegation, strategic voting, information aggregation, Condorcet Jury theorem JEL Classification: D72
    Date: 2023
  3. By: Michela Cella; Elena Manzoni; Francesco Scervini
    Abstract: In this paper we study, theoretically and empirically, how the belief that the gender of politicians affects their competence on a range of issues may influence electoral outcomes depending on the salience of these issues. We propose a model of issue-specific gender bias in elections which can describe both the presence of a real comparative advantage (‘kernel-of-truth’ case, or stereotype) and the case of pure prejudice. We show that the bias influences electoral results but it can be partially reversed by successful information transmission during the electoral campaign. We then empirically investigate the relation between issue salience and women’s performance, using US data on House and Senate elections. Estimates of issue salience are obtained using Google Trends data. Exploiting the longitudinal dimension of the dataset at district level and an IV strategy to rule out possible endogeneity, we show a positive correlation between the salience of feminine issues and women’s electoral outcomes. The average effect is sizable with respect to the share of votes for women candidates, even if not large enough, on average, to increase the probability that women candidates win elections.
    Keywords: gender bias, elections, female politicians.
    JEL: D72 J16
    Date: 2023–09
  4. By: Huet-Vaughn, Emiliano (Pomona College)
    Abstract: The positive political returns to providing cash transfers have been well documented. However, redistribution through the tax and transfer system, while direct, is not the only means by which governments seek to change the income distribution: regulation of private market transactions may have a similar, if indirect, effect, implicitly redistributing via so-called "pre-distribution" policies. Wage floors, in particular, are implemented with the explicit goal of redistributing pre-tax firm income to low-wage workers. In the United States, polls consistently indicate minimum wage increases are broadly popular, and, also clearly associated with the Democratic party. This paper provides the first test of whether large minimum wage increases actually yield electoral gains for Democrats. For both federal and state races, I find no evidence that this is generally true using an event-study design and sub-national variation in minimum wages from the early 1990s to recent years. A null result is further confirmed when using a beneficiary-level political sentiment measure and difference-in-difference design. Various explanations for the finding are explored and dispelled while newly collected survey evidence supports a salience, or inattention, mechanism. Specifically, voters are found to attend much less to a minimum wage increase than to an equivalently-valued direct cash transfer from the government. This suggests putting money in people's hands may not be enough to receive political credit and that the directness of a transfer may itself matter.
    Keywords: salience, minimum wage, voting
    JEL: J8 D72
    Date: 2023–08
  5. By: Ashani Amarasinghe; Pushkar Maitra; Yuchen Zhongs
    Abstract: Better economic outcomes can prevail when governments at different levels of hierarchy are politically aligned. This often happens because upper level governments are more willing to transfer resources to, and invest in public goods in, aligned constituencies, where the elected candidate belongs to the party in power. In this paper we examine whether such political alignment causally affects public safety. We consider the case of the Naxalite insurgency in India, an issue of significant public safety and security. We focus on close elections using a regression discontinuity (RD) design, which allows us to examine the causal impact of electing a (state ruling party) aligned candidate at the constituency level. Our RD estimates show that the election of an aligned candidate leads to a significant reduction in the incidence of violence. We find that the benefits of alignment are amplified where politically aligned constituencies are spatially clustered. Examining the role of local natural resource activity, i.e., mining, as an underlying mechanism, we find that this negative effect is driven by constituencies close to mining areas. These findings confirm the relevance of political alignment in delivering public safety within constituencies, and the potential role played by local mining activity.
    Keywords: Political alignment; Naxalite insurgency; public safety; India
    Date: 2023–09
  6. By: Bhalotra, Sonia (University of Warwick, CAGE); Clots-Figueras, Irma (University of Kent); Iyer, Lakshmi (University of Notre Dame)
    Abstract: We investigate the impact of the political representation of minority groups on the incidence of ethnic conflict in India. We code data on Hindu-Muslim violence and Muslim political representation in India and leverage quasi-random variation in legislator religion generated by the results of close elections. We find that the presence of Muslim legislators results in a large and significant decline in Hindu-Muslim conflict. The average result is driven by richer states and those with greater police strength. Our results suggest that the political empowerment of minority communities can contribute to curbing civil conflict.
    Keywords: conflict, violence, religion, political representation, police, close elections JEL Classification: D72, D74, J15
    Date: 2023
  7. By: Bauernschuster, Stefan (University of Passau); Blum, Matthias (German Medical Association); Hornung, Erik (University of Cologne); Koenig, Christoph (University of Rome Tor Vergata)
    Abstract: How do health crises affect election results? We combine a panel of election results from 1893–1933 with spatial heterogeneity in excess mortality due to the 1918 Influenza to assess the pandemic’s effect on voting behavior across German constituencies. Applying a dynamic differences-in-differences approach, we find that areas with higher influenza mortality saw a lasting shift towards left-wing parties. We argue that pandemic intensity increased the salience of public health policy, prompting voters to reward parties signaling competence in health issues. Alternative explanations such as pandemic-induced economic hardship, punishment of incumbents for inadequate policy responses, or polarization of the electorate towards more extremist parties are not supported by our findings.
    Keywords: Pandemics, Elections, Health, Voting behavior, Issue salience, Issue ownership, Weimar Republic JEL Classification: D72, I18, N34, H51
    Date: 2023
  8. By: Fazio, Andrea
    Abstract: In 1968, young people grew up in an atmosphere of strong dissatisfaction and distrust against the status quo. We show that higher exposure to protests in 1968 leads to higher dissatisfaction toward national governments and raises the probability of voting for populist parties. Consistently with the impressionable years hypothesis, we find these effects valid only for those aged between 18 and 25 during 1968. Our results are robust to a series of placebo tests and to alternative definitions of our treatment and control groups. We find that our results are driven by individuals with a middle or low level of education. We also find suggestive evidence that the mechanisms driving our results can depend on individuals' level of education: within our treated cohort people with an elementary level of education appear more attracted by the populist rhetoric, while people with a middle level of education are more likely to care about traditional values.
    Keywords: Populism, 1968 Protests, Log-term Preferences, Impressionable years
    JEL: P16 D72 Z10
    Date: 2023
  9. By: Gretton, Jeremy; Roemer, Tobias; Schlüter, Elmar
    Abstract: In this replication study, we revisit the main empirical claims of Hamel and Wilcox-Archuleta's (HW) 2022 study on the impact of daytime racial diversity on White Americans' voting behavior and racial attitudes. HW introduce a novel zip code level measure of racial diversity that accounts for the influx of Black workers during daytime, showing that conventional purely residential based measures often underestimate the true degree of experienced racial diversity. Using survey data from the CCES, their findings suggest a negative correlation between racial flux and White Americans' Democratic voting tendencies and a positive correlation with racial resentment and opposition to affirmative action, all while controlling for the residential share of Blacks in the zip code. We assess the replicability of these findings by: (1) replicating the main results using the provided replication code, (2) reconstructing the racial flux measure and survey from raw data, (3) conducting multiverse analyses, and (4) replicating the analysis using an alternative data source. Our replication validates the robustness and accuracy of HW's initial conclusions, emphasizing the role of daytime racial diversity in shaping White Americans' political and racial attitudes.
    Keywords: Racial Diversity, Racial Attitudes, Voting Behavior
    JEL: D72 J15
    Date: 2023
  10. By: Andrey Malenko; Nadya Malenko
    Abstract: Traditionally, fund managers cast votes on behalf of investors whose capital they manage. Recently, this system has come under intense debate given the growing concentration of voting power among a few asset managers and disagreements over environmental and social issues. Major fund managers now offer their investors a choice: delegate their votes to the fund or cast votes themselves ("voting choice"). This paper develops a theory of delegation of voting rights and studies the implications of voting choice for investor welfare. If the reason for offering voting choice is that investors have different preferences, then investors may retain their voting rights excessively, inefficiently prioritizing their private preferences over information. As a result, investors on aggregate are not always better off if voting choice is offered to them. In contrast, if the reason for offering voting choice is that investors have information about the proposal that the fund manager does not have, then voting choice is generally efficient, increasing investor welfare. However, if information collection is costly, voting choice may lead to coordination failure, resulting in less informed voting outcomes.
    JEL: D74 G34
    Date: 2023–08
  11. By: Mosler, Hannes B. (Ed.)
    Abstract: In recent decades, the surge of populist movements and leaders has captivated the attention of scholars, policymakers, and the general public around the world. The rise of populism and populists has prompted a profound reevaluation of the dynamics within democratic societies and the complex interplay between political, social, and economic forces. As this phenomenon continues to evolve, it has ignited intense academic debates, sparking a quest to understand its manifestations, causes, and implications across diverse socio-political contexts. This collection of working papers embarks on a hitherto unique journey, focusing its analytical lens on the enigmatic landscape of the potentialities of populism within the East Asian liberal democracies of South Korea, Japan, and Taiwan. Each paper in this collection engages with specific cases, delving into the intricate web of the political, cultural, and social nuances that shape the trajectory of populism within these countries. However, these papers do not merely stand as isolated studies; they are embedded within a larger academic discourse, contributing to and enriching the broader dialogue on the nature and implications of populism.
    Keywords: Democracy, Liberalism, Populism, Japan, South Korea, Taiwan
    Date: 2023
  12. By: Ibrahim Elbadawi (Economic Research Forum); Alzaki Alhelo (Department of Economics, University of Khartoum, Sudan.)
    Abstract: Around 65 years ago when Sudan was about to gain its independence, it was described as a “bright spot in a dark continent.” Unfortunately, that optimism about Sudan could not have been more wrong. Instead, Sudan has come to be a country defined by conflicts, political instability, and development failures. To date, the country has experienced three long-reigning, dysfunctional, and autocratic military regimes interrupted by three popular uprisings (in 1964, 1986, and 2018-present). The first two led to short-lived democracies, while, as before, the demise of the last autocratic regime led to the formation of the current transitional government, entrusted with the task of preparing the country for democratic elections in 2023. However, this nascent transitional government was toppled by a palace coup on 25 October 2021 well before the much-anticipated election of 2023. This peculiar Sudanese political history came to be characterized in popular Sudanese literature as the “Sudan Syndrome.” The main research questions considered in this paper revolve around explaining this “syndrome, ” drawing lessons for the current transition, and exploring how Sudan can break free from the vicious cycle that plagued its post-independence history toward the stable, prosperous, democratic state that was originally thought to be its destiny. We use the “narrow corridor” model of Daron Acemoglu and James Robinson as the main analytical framework for analyzing the phenomena and for drawing lessons for the current political transition in Sudan. Specifically, we ask three fundamental questions: how can Sudan re-enter the corridor following the recent setback in October 2021? How can the country broaden the corridor and stay in it toward a balanced and mature democratic project? Finally, how can the country engineer the national project for achieving these two objectives while accounting for both the political and economic agenda of the social contract?
    Date: 2023–08–20
  13. By: Farjam, Mike; Bravo, Giangiacomo (LInnaeus University)
    Abstract: Attitudes and expectations towards others are major drivers of political polarization, while little is known about actual differences in beliefs and behaviors between partisan groups. We designed an experiment where self-reported attitudes were contrasted with economically point estimates of official data where participants received an economic benefit for correct answers. Our design offers three key contributions: 1) when measuring attitudes, a small partisan sub-group with extreme attitudes is the main reason for the observed partisan gap, while this group disappears when measuring incentivized data estimates; 2) economically-incentivized and unincentivized measures within individuals hardly correlate; 3) we provide a novel measure of perceived polarization, where individuals guess data estimates of those with opposing party preferences and receive an economic compensation for correct guesses. This novel perceived polarization measure correlates with attitudes but not with data estimates, supporting models linking polarization more to expectations towards others than to actual behavioral differences. This casts further doubt on standard surveys measuring attitudes and points towards strategies to lower perceived polarization within contested issues.
    Date: 2023–08–30
  14. By: Davide Cantoni; Andrew Kao; David Y. Yang; Noam Yuchtman
    Abstract: Citizens have long taken to the streets to demand change, expressing political views that may otherwise be suppressed. Protests have produced change at local, national, and international scales, including spectacular moments of political and social transformation. We document five new empirical patterns describing 1.2 million protest events across 218 countries between 1980 and 2020. First, autocracies and weak democracies experienced a trend break in protests during the Arab Spring. Second, protest movements also rose in importance following the Arab Spring. Third, protest movements geographically diffuse over time, spiking to their peak, before falling off. Fourth, a country’s year-to-year economic performance is not strongly correlated with protests; individual values are predictive of protest participation. Fifth, the US, China, and Russia are the most over-represented countries by their share of academic studies. We discuss each pattern’s connections to the existing literature and anticipate paths for future work.
    JEL: P0
    Date: 2023–08
  15. By: Bjørnskov, Christian (Department of Economics, Aarhus University, and); Mchangama, Jacob (Future of Free Speech Project, Vanderbilt University)
    Abstract: The association between freedom of expression – freedom of speech and the freedom of the media – and social conflict is theoretically ambiguous and politically highly contested. On one side of the debate, people argue that freedom of speech and freedom of the media create social conflict by giving people and organized interests the opportunity to disagree in public, creating visible conflicts and enabling people to insult and incite hatred against other groups and attempt to marginalize them. On the other side of the political debate, the proponents of the freedom of expression argue that free speech and free media act as safety valves that allow substantial disagreement to be expressed in a peaceful manner instead of turning into violence, enabling deliberation among different groups, and furthering the understanding and potential acceptance of substantially different points of view. In this paper, we therefore take the association to the test. We combine data on freedom of expression from the V-Dem database and conflict data from the Banks dataset with additional data on economic performance and political institutions. In a large panel dataset, we find evidence of a negative association between the freedom of expression and social conflict. Further tests suggest that this association is specific to countries with democratic political institutions while the empirical association in autocracies is ambiguous.
    Keywords: Freedom of expression; Freedom of speech; Freedom of the media; Civil rights; Violence; Unrest; Conflict
    JEL: K38
    Date: 2023–09–21
  16. By: Bengtsson, Erik (Department of Economic History, Lund University)
    Abstract: In the late 1970s, the Swedish economy faced a profit squeeze which threatened to hamper investments and hence the creation of jobs. This engendered a massive debate in the media and among economists and policymakers. This paper investigates the discussion of “the politics of profits”, the policy measures directed towards manipulating the distribution between capital income and labour income in the Swedish economy from the mid-1970s to the mid-1980s. The paper indicates that the capital-labour distribution varied significantly over time and that this became a major issue of debate, and shows the relevance of “the politics of profits” for analyses of economic policy change in the 1970s and 1980s.
    Keywords: economic policy; Sweden; macroeconomics; history of capitalism; mixed economy
    JEL: H60 N14 N44 P16
    Date: 2023–09–01

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