nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒11‒06
fourteen papers chosen by
Eugene Beaulieu, University of Calgary

  1. The Effect of Childhood Environment on Political Behavior: Evidence from Young U.S. Movers, 1992–2021 By Jacob R. Brown; Enrico Cantoni; Sahil Chinoy; Martin Koenen; Vincent Pons
  2. The Political Economy of Commitment to Policies By Josse Delfgaauw; Otto H. Swank
  3. Lack of consensus, dispersion of political power and public debt: evidence from a sample of developed countries By Mohamed Mansour; Eric Kamwa
  4. Corporate political activism and information transfers By Christensen, Dane M.; Jin, Hengda; Lee, Joshua A.; Sridharan, Suhas A.; Wellman, Laura A.
  5. The generation gap in direct democracy: age vs. cohort effects By Ahlfeldt, Gabriel M.; Maennig, Wolfgang; Mueller, Steffen Q.
  6. Integrating host-country political heterogeneity into MNE-state bargaining: insights from international political economy By Bhaumik, Sumon; Estrin, Saul; Narula, Rajneesh
  7. Does electing criminally accused politicians affect the constituency level Maoist incidents? Evidence from India By Zhong, Yuchen
  8. Betting on the Wrong Horse: Lobbying on TPP and the 2016 U.S. Presidential Election By Hennicke, Moritz; Blanga-Gubbay, Michael
  9. Does Citizen Participation in Budget Allocation Pay? A Survey Experiment on Political Trust and Participatory Governance By Ardanaz, Martín; Otálvaro-Ramírez, Susana; Scartascini, Carlos
  10. The Political Economy of a “Miracle Cure”: The Case of Nebulized Ibuprofen and its Diffusion in Argentina By Sebastian Calónico; Rafael Di Tella; Juan Cruz Lopez del Valle
  11. Do bigger legislatures lead to bigger government? Evidence from a Brazilian municipal council reform By Schneider, Rodrigo; Veras, Henrique
  12. 'Nurses are seen as general cargo, not the smart TVs you ship carefully': the politics of nurse staffing in England, Spain, Sweden, and the Netherlands By Wallenburg, Iris; Friebel, Rocco; Winblad, Ulrika; Maynou Pujolras, Laia; Bal, Roland
  13. Love or politics? Political views regarding the war in Ukraine in an online dating experiment By Beloborodova, Anna
  14. Gender Differences in Cooperation in the U.S. Congress? An Extension of Gagliarducci and Paserman (2022) By Bagues, Manuel; Campa, Pamela; Etingin-Frati, Giulian

  1. By: Jacob R. Brown; Enrico Cantoni; Sahil Chinoy; Martin Koenen; Vincent Pons
    Abstract: We ask how childhood environment shapes political behavior. We measure young voters’ participation and party affiliation in nationally comprehensive voter files and reconstruct their childhood location histories based on their parents’ addresses. We compare outcomes of individuals who moved between the same origin and destination counties but at different ages. Those who spend more time in the destination are more influenced by it: Growing up in a county where their peers are 10 percentage points more likely to become Republicans makes them 4.7 percentage points more likely to become Republican themselves upon entering the electorate. The effects are of similar magnitude for Democratic partisanship and turnout. These exposure effects are primarily driven by teenage years, and they persist but decay after the first election. They reflect both state-level factors and factors varying at a smaller scale such as peer effects.
    JEL: D72 P0
    Date: 2023–10
  2. By: Josse Delfgaauw (Erasmus University Rotterdam); Otto H. Swank (Erasmus University Rotterdam)
    Abstract: IPCC (2022) documents a looming gap between climate goals and implemented policies and points to a lack of political commitment. We study policymakers' incentives to commit. A policymaker decides on a policy to encourage citizens to make investments and determines the degree of flexibility to change the policy after investments have been made. This adds redistributive concerns to the trade-off between commitment and flexibility. When a majority of citizens invest, redistributive concerns alleviate the time-inconsistency problem. When a minority of citizens invest, redistributive concerns aggravate the time-inconsistency problem. Then, the policymaker either commits too strongly or refrains from commitment altogether.
    Keywords: commitment, flexibility, redistribution, median voter, climate
    JEL: D72 D78 H23 Q52
    Date: 2023–10–12
  3. By: Mohamed Mansour (Université Paris-Dauphine Tunis); Eric Kamwa (LC2S - Laboratoire caribéen de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UA - Université des Antilles)
    Abstract: The aim of this paper is to study empirically the relationship between political governance and public debt by testing a number of hypotheses. We examine the effects of the dispersion of power on public debt from an econometric study carried out on a sample of thirteen developed countries for macroeconomic and political data covering the period 1996-2012. It comes out that the lack of consensus between the political parties in the government coalition and the dispersion of power within the government are factors explaining the increase in public debt.
    Keywords: Public debt, political governance, democracy, public choice, power
    Date: 2023–09–18
  4. By: Christensen, Dane M.; Jin, Hengda; Lee, Joshua A.; Sridharan, Suhas A.; Wellman, Laura A.
    Abstract: Prior research suggests that: (1) politically active firms have an information advantage over firms that do not engage in the political process, but also that (2) politically active firms are more likely to disclose policy-related information. We examine whether there are externalities associated with the processing of political information by politically active firms. We study this question in the setting of intra-industry information transfers around earnings announcements. Measuring firms' political activism using campaign contributions, we find stronger intra-industry information transfers from politically active firms to their industry peers. These information transfers are stronger when there is more discussion during conference calls of political topics that have industry or market-wide implications. Similarly, these information transfers are also stronger when there is greater political uncertainty. Our paper highlights an important information externality related to politically active firms' disclosures and improves our understanding of how politically active firms affect their industries' information environment.
    Keywords: Information transfer, earnings announcements, political economy
    JEL: D72 M41 M48
    Date: 2023
  5. By: Ahlfeldt, Gabriel M.; Maennig, Wolfgang; Mueller, Steffen Q.
    Abstract: We document a generation gap in direct democracy outcomes across a wide range of topics that is causally related to aging. To this end, we combine different sources of postelection survey data covering more than 300 Swiss referenda and four decades. Young voters are more likely to support initiatives that favor their own generation in the present, e.g., a lower retirement age or increased unemployment benefits, or in favor of all generations in the future, e.g., environment protection. To estimate the causal effect of aging on political attitudes, we propose a novel unconstrained panel rank regression approach that separately identifies age and cohort effects. The aging effect on political attitudes is robust for controlling for arbitrary cohort effects and appears to be driven by expected utility maximization and not by habituation-induced status-quo bias.
    Keywords: age; cohort; direct democracy; status quo; referendum; Cohort; Referendum; Age; Direct democracy; Status quo
    JEL: P48 J10 D70 Q50 H40 H30
    Date: 2022–03–28
  6. By: Bhaumik, Sumon; Estrin, Saul; Narula, Rajneesh
    Abstract: The international business (IB) literature has emphasised the heterogeneity of firm strategies in shaping MNE–state bargaining, but largely ignored the heterogeneity of states. In contrast, the international political economy (IPE) literature provides a more nuanced consideration of state strategies and their economic and political priorities. We seek to address this oversight by making two related contributions. In the context of MNE–state bargaining, we first discuss how differences in political systems and the political and economic objectives of states may affect their negotiating stance with MNEs. We consider the impact of changes in the balance of state objectives by considering how much importance governments assign to improving the welfare of its broader population, relative to how important they are concerned with the “private benefits” that accrue to the political elites. This enables us to add micro-foundations to the characterisation of the state. Second, we apply a Nash bargaining framework to MNE–state negotiations that vividly captures the relative bargaining powers of the MNE and the state, including how “outside options” available to these two actors can influence the shape of actual bargains. We discuss the implications of these two contributions for future research.
    Keywords: international political economy; MNE-state bargaining; private benefits; democracy; autocracy; outside options
    JEL: L81
    Date: 2023–10–04
  7. By: Zhong, Yuchen (Monash University)
    Abstract: This paper estimates the causal effects of electing criminally accused politicians on Maoist-initiated incidents in India at the constituency level. The research leverages the methodology of regression discontinuity design, contrasting constituency where criminally accused candidates barely lost with constituencies where non-accused candidates barely lost. The findings provide preliminary indications of the negative effect of electing criminally accused leaders on the Maoist-initiated incidents. Notably, this effect is more pronounced when accounting for variations across different states. The analysis reveals that the election of criminally accused leaders correlated with a reduction of nearly three Maoist-initiated incidents in Jharkhand, and notably, this effect remains observable over an extended period.
    Keywords: Criminal Accusations ; Regression Discontinuity ; Maoist incidents JEL classifications: D72 ; D74
    Date: 2023
  8. By: Hennicke, Moritz; Blanga-Gubbay, Michael
    Abstract: We provide systematic evidence that lobbying by firms on trade agreements matters for their stock prices. We leverage a unique shock to U.S. trade policy -- the unexpected victory of Donald Trump in the 2016 U.S. presidential election, and the de-facto U.S. withdrawal from the Trans-Pacific Partnership (TPP) -- creating exogenous variation in investors' expectations of potential gains from lobbying. We find that share prices of companies that lobbied in favor of TPP underperformed by 0.41pp lower returns over the course of 10 days following the election. We construct an additional measure of lobbying on the agreement from online news articles, that strengthens our assumption that market participants are informed and build expectations over potential gains from TPP. By comparing the original TPP agreement with its newer version (CPTPP) without U.S. participation, we provide suggestive evidence that lobbying on specific provisions of high importance to the U.S. led to lower returns.
    Date: 2023–10–13
  9. By: Ardanaz, Martín; Otálvaro-Ramírez, Susana; Scartascini, Carlos
    Abstract: Participatory programs can reduce the informational and power asymmetries that engender mistrust. These programs, however, cannot include every citizen. Hence, it is important to evaluate not only if they affect allocations and trust among those who participate, but also if they could also affect trust among those who do not participate. We assess the effect of an informational campaign about these programs in the context of a survey experiment conducted in the city of Buenos Aires, Argentina. Results show that providing detailed information about a participatory budget initiative shapes voters' assessments of government performance and political trust. Effects are larger for individuals with ex ante more negative views about the local governments quality and for individuals who believe in the ability of their communities to solve the type of collective-action problems that the program seeks to address. Because mistrustful individuals tend to shy away from demanding the government public goods that increase overall welfare, well-disseminated participatory budget programs could affect budget allocations directly and through their effect on trust. Investing in these programs could be worthwhile.
    Keywords: Participatory governance;Collective decision-making;Trust;Survey experiment;Local governments
    JEL: C90 D70 D90 H72 P16
    Date: 2022–06
  10. By: Sebastian Calónico; Rafael Di Tella; Juan Cruz Lopez del Valle
    Abstract: We document the diffusion of nebulized ibuprofen in Argentina as a treatment for COVID-19. As the pandemic spread, this clinically unsupported drug reached thousands of patients, even some seriously ill, despite warnings by the regulator and medical societies. Detailed daily data on deliveries for all towns in one of the largest provinces suggests a role for “rational” forces in the adoption of a miracle cure: towns adopt it when neighbors that adopt it are successful in containing deaths (a learning effect), even after controlling for the average adoption of peers. Results from a survey are consistent with learning. They also reveal a large role of beliefs: subjects that are classified as “Right” are more likely adopt and to learn, while those that are “Skeptical” report an increase in their demand when primed with the regulator’s ban.
    JEL: I18 O33 P46
    Date: 2023–10
  11. By: Schneider, Rodrigo; Veras, Henrique
    Abstract: Do bigger legislatures lead to bigger government? We exploit a Brazilian reform that allocated the number of municipal council seats based on population thresholds in a regression discontinuity design. We find that larger councils have significantly higher public expenditures on social goods and legislative costs. Increased spending is partly financed by significantly higher local tax revenues and is driven by a less salient form of tax to voters – on services – than property taxes. As a potential explanation for our findings, we show that, more council seats led to greater political diversity.
    Keywords: legislature size; municipal councils; local taxes; government expenditure; regression discontinuity; Brazil
    JEL: D72 H72 R51
    Date: 2023–09–29
  12. By: Wallenburg, Iris; Friebel, Rocco; Winblad, Ulrika; Maynou Pujolras, Laia; Bal, Roland
    Abstract: Nurse workforce shortages put healthcare systems under pressure, moving the nursing profession into the core of healthcare policymaking. In this paper, we shift the focus from workforce policy to workforce politics and highlight the political role of nurses in healthcare systems in England, Spain, Sweden, and the Netherlands. Using a comparative discursive institutionalist approach, we study how nurses are organised and represented in these four countries. We show how nurse politics plays out at the levels of representation, working conditions, career building, and by breaking with the public healthcare system. Although there are differences between the countries - with nurses in England and Spain under more pressure than in the Netherlands and Sweden - nurses are often not represented in policy discourses; not just because of institutional ignorance but also because of fragmentation of the profession itself. This institutional ignorance and lack of collective representation, we argue, requires attention to foster the role and position of nurses in contemporary healthcare systems.
    Keywords: discursive institutionalism; institutional ignorance; nurse politics; workforce shortage
    JEL: R14 J01
    Date: 2023–09–13
  13. By: Beloborodova, Anna
    Abstract: How polarized is Russian society regarding the war in Ukraine? Political views have an impact on various behaviors, including relationship formation. In this paper I study the extent of polarization in the Russian society regrading the war in Ukraine by conducting a field experiment on a large Russian dating site and collecting data on more than 3, 000 profile evaluations. The findings reveal sizable penalties for those who express pro-war or anti-war positions on their dating profiles, suggesting considerable levels of polarization in the Russian society regarding the war. Age of the online dating site users is the most divisive factor, as younger individuals are less likely to approach pro-war profiles but not anti-war profiles, while older individuals are less likely to respond positively to profiles indicating anti-war views but not pro-war views.
    Keywords: affective polarization; relationship formation; assortative mating; field experiment; war in Ukraine
    JEL: C93 D1 J12
    Date: 2023–10–13
  14. By: Bagues, Manuel; Campa, Pamela; Etingin-Frati, Giulian
    Abstract: Gagliarducci and Paserman (2022) study gender differences in cooperative behavior among politicians using information from the U.S. House of Representatives between 1988 and 2010 on (i) the number of co-sponsors on bills and (ii) the share of co-sponsors from the rival party. Through different empirical strategies, they show that women-sponsored bills tend to have more co-sponsors, but the gap is only statistically significant among Republicans. Moreover, Republican women recruit a significantly larger share of co-sponsors from the rival party than Republican men, whereas the opposite is true among Democrats. GP argue that the observed pattern is consistent with a commonality of interest driving cooperation, rather than gender per se, since during this period Republican women were ideologically closer to the rival party than their male colleagues, while female Democrats were further away. We examine the robustness of these findings to (i) the correction of some errors in two control variables of the dataset used by GP and (ii) clustering the standard errors at the individual level, instead of individual-term. These changes have a relatively minor impact on results: most coefficients are still statistically significant and the main conclusions from the analysis are confirmed. Furthermore, we extend the analysis to the 2011-2020 period. The analysis of gender differences in bipartisan cooperation confirms GP's hypothesis that ideological distance plays an important role. However, results are slightly different when we analyze overall cooperation. The gender gap in favor of women is larger in magnitude than in GP and it is statistically significant in several specifications, providing support for the hypothesis that gender also matters for cooperation.
    Date: 2023

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