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on Positive Political Economics |
| By: | Aidt, T.S.; Dutta, J. |
| Abstract: | This paper argues that uncertain or random voter turnout plays a key role in mediating conflicts of interest between voters and politicians on the one hand and heterogenous groups of voters on the other. Random voter turnout creates an incentive for politicians to seek con- sensus because it is unclear ex ante who will hold the majority among those who turn out to vote. We argue that this leads to efficient provision of public goods and that it protects minority groups against the tyranny of the majority. We also argue that compulsory voting may not be desirable because it reduces randomness in turnouts. |
| Keywords: | Political Agency, Performance Voting, Turnout Uncertainty, Public Finance |
| JEL: | D72 D78 H41 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0843&r=pol |
| By: | Elinder, Mikael (Uppsala University); Jordahl, Henrik (Research Institute of Industrial Economics); Poutvaara, Panu (University of Helsinki) |
| Abstract: | We present and test a theory of prospective and retrospective pocketbook voting. Focusing on two large reforms in Sweden, we establish a causal chain from policies to sizeable individual gains and losses and then to voting. The Social Democrats proposed budget cuts affecting parents with young children before the 1994 election, but made generous promises to the same group before the 1998 election. Since parents with older children were largely unaffected we use a difference-in-differences strategy for identification. We find clear evidence of prospective pocketbook voting. Voters respond to campaign promises but not to the later implementation of the reforms. |
| Keywords: | elections, economic voting, pocketbook voting, self-interest, prospective voting, retrospective voting, child care |
| JEL: | C21 D72 H50 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3763&r=pol |
| By: | Bevelander, Pieter (Malmö University); Pendakur, Ravi (University of Ottawa) |
| Abstract: | Three decades ago, Sweden extended municipal and county voting privileges to non-citizen residents arguing that it would increase political influence, interest and self-esteem among foreign citizens. Three decades later, electoral participation on the part of immigrants is perceived as being substantially lower than for native born citizens and questions have arisen regarding the degree to which this may be symptomatic of a larger integration issue. The aim of this paper is to explore the determinants of voting within the context of social inclusion by comparing immigrants, their descendants and native citizens in Sweden while controlling for a range of socio-economic, demographic characteristics and contextual factors. We use two unique sets of data to conduct our research. The 2006 Electoral Participation Survey contains information on individual electoral participation in national, county and municipal elections. We match this information to registry data from Statistics Sweden which contains socio-demographic information for every Swedish resident. From these two sources, we are able to create a database which matches voting behaviour to individual characteristics for more than 70,000 residents of whom almost 13,000 are not citizens. We find that after controlling for demographic, socio-economic and contextual characteristics, acquisition of citizenship makes a real difference to the odds of voting and is therefore, a likely and powerful indicator of social inclusion. Immigrants who obtain citizenship are far more likely to vote than those who do not. Arguably, some of this may be attributed to the number of years of residency in the country. However, even non-citizens born in Sweden have substantially lower odds of voting. Country of birth also makes a difference. Immigrants from the Americas and those born in Sweden with immigrant parents are more likely to vote than immigrants from other countries. Somewhat surprisingly, age at immigration does not make a substantial difference to the odds of voting. |
| Keywords: | political participation, immigrants, descendants, electoral participation, human capital, citizenship, social inclusion |
| JEL: | D72 J15 J61 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3764&r=pol |
| By: | Jeffrey Milyo (Department of Economics, University of Missouri-Columbia); Reagan Baughman |
| Abstract: | We exploit the existence of substantial variation in state policies toward public health insurance for children between 1990 and 2002 to estimate the economic and political determinants of state eligibility levels. Controlling for state and year effects, eligibility levels are not significantly associated with either the percentage of uninsured children in the state or the eligibility policy of neighboring states; further, variation in eligibility levels within state is negatively associated with both the federal matching rate and state fiscal capacity. We also observe that state political preferences, measured by the Democrats share of seats in the lower chamber of the state legislature, are a relatively important a determinant of state eligibility levels. However, other political factors, such as party control of state government, voter turnout, legislative term limits and campaign finance regulations do not influence state eligibility levels. |
| Keywords: | Medicaid, SCHIP, Political Economy, Race-to-the-Bottom |
| JEL: | D78 H75 |
| Date: | 2008–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0813&r=pol |
| By: | Janeba, Eckhard (Dept. of Economics, University of Mannheim); Schjelderup, Guttorm (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) |
| Abstract: | The views on the welfare effects of tax competition differ widely. Some see the fiscal externalities as the cause for underprovision of public goods, while others see tax competition as means to reduce government inefficiencies. Using a comparative politics approach we show that tax competition among presidential-congressional democracies is typically welfare improving, while harmful among parliamentary democracies if under the latter the marginal benefit of the public good is sufficiently high. The results hold when politicians seek re-election because of exogenous benefits of holding office. By contrast, when politicians hold office only to extract rents, tax competition is harmful if politicians are sufficiently patient. |
| Keywords: | Tax competition; welfare effects; comparative politics approach |
| JEL: | H24 |
| Date: | 2008–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2008_022&r=pol |
| By: | Erich Gundlach; Martin Paldam (School of Economics and Management, University of Aarhus, Denmark) |
| Abstract: | The paper considers the transformation of the political system as countries pass through the Grand Transition from a poor developing country to a wealthy developed country. In the process most countries change from an authoritarian to a democratic political system. This is shown by using the Gastil democracy index from Freedom House. First, the basic pattern of correlations reveals that a good deal of the short- to medium-run causality appears to be from democracy to income. Then a set of extreme biogeographic instruments is used to demonstrate that the long-run causality is from income to democracy. The long-run result survives various robustness tests. We show how the Grand Transition view resolves the seeming contradiction between the long-run and the short- to medium-run effects. |
| Keywords: | Paths of development, democracy, biogeography |
| JEL: | B25 O1 |
| Date: | 2008–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2008-15&r=pol |
| By: | Jeffrey Milyo (Department of Economics, University of Missouri-Columbia); David M. Konisky; Lilliard E. Richardson, Jr. |
| Abstract: | Scholars have long argued that state legislative professionalism, or the provision of staff, legislator salary, and session length, has behavioral incentives for legislators and implications for legislative capacity. Scant attention, however, has been devoted to public attitudes on the provision of these legislative resources. Using survey data on preferences for features associated with a citizen legislature versus a professional legislature, we examine the contours of public attitudes on professionalism and test models on the factors associated with these attitudes. Results suggest partisanship, trust, and approval of the local delegation matter, but the factors differ by the legislative professionalism of the respondents state and for low versus high knowledge citizens. |
| Keywords: | Legislative Professionalism, Public Opinion, Political Economy |
| JEL: | D72 H79 |
| Date: | 2008–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0812&r=pol |
| By: | Markus Brückner; Antonio Ciccone |
| Abstract: | According to the economic approach to political transitions, negative transitory economic shocks can open a window of opportunity for democratic change. Testing the theory requires a source of transitory shocks to the aggregate economy. We rely on rainfall shocks in Sub-Saharan African countries. Our analysis yields that negative transitory shocks lead to significant democratic change. A transitory 10 percent drop in income is followed by an improvement in democracy scores of 9 percentage points, and by an increase in the probability of a transition to democracy of 13 percentage points. |
| Keywords: | Democratization, transitory economic shocks |
| JEL: | O0 P0 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1114&r=pol |
| By: | Jeffrey Milyo (Department of Economics, University of Missouri-Columbia); David M. Konisky; Lilliard E. Richardson, Jr. |
| Abstract: | Objectives. This article examines environmental policy attitudes, focusing on the differences in preferences across issue type (i.e., pollution, resource preservation) and geographical scale (i.e., local, national, global). In addition, we study whether an individuals trust in government influences environmental policy attitudes. Methods. Analyzing data from the 2007 Cooperative Congressional Election Study, we estimate a series of OLS regression models to examine the publics environmental policy attitudes. Results. We find stronger public support for government action to address pollution issues than resources issues, and stronger support for local and national pollution abatement than dealing with global problems. We also find that Republicans and ideological conservatives are less likely to support further government effort to address the environment, and that more trusting individuals are more favorable to government action to address pollution and global issues. Conclusion. Environmental policy attitudes vary by the nature of the issue; however, political ideology and partisan affiliation are consistent predictors of preferences across issues, even when controlling for an individuals level of trust in government. |
| Keywords: | Environment, NIMBY, Public Opinion, Political Economy |
| JEL: | Q5 H1 |
| Date: | 2008–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0811&r=pol |
| By: | Campos, Nauro F. (Brunel University); Karanasos, Menelaos G. (Brunel University); Tan, Bin (Brunel University) |
| Abstract: | This paper investigates the effects of financial development and political instability on economic growth in a power-ARCH framework with data for Argentina from 1896 to 2000. Our findings suggest that (i) informal or unanticipated political instability (e.g., guerrilla warfare) has a direct negative impact on growth; (ii) formal or anticipated instability (e.g., cabinet changes) has an indirect (through volatility) impact on growth; (iii) the effect of financial development is positive and, surprisingly, not via volatility; (iv) the informal instability effects are much larger in the short- than in the long-run; and (v) the impact of financial development on economic growth is negative in the short- but positive in the long-run. |
| Keywords: | economic growth, financial development, volatility, political instability, power-ARCH |
| JEL: | C14 O40 E23 D72 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3752&r=pol |
| By: | Prachi Mishra; Anna Maria Mayda; Giovanni Facchini |
| Abstract: | While anecdotal evidence suggests that interest groups play a key role in shaping immigration policy, there is no systematic empirical analysis of this issue. In this paper, we construct an industry-level dataset for the United States, by combining information on the number of temporary work visas with data on lobbying activity associated with immigration. We find robust evidence that both pro- and anti-immigration interest groups play a statistically significant and economically relevant role in shaping migration across sectors. Barriers to migration are lower in sectors in which business interest groups incur larger lobby expenditures and higher in sectors where labor unions are more important. |
| Keywords: | Working Paper , United States , |
| Date: | 2008–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/244&r=pol |
| By: | Brian G. Knight; Chun-Fang Chiang |
| Abstract: | This paper investigates the relationship between media bias and the influence of the media on voting in the context of newspaper endorsements. We first develop a simple econometric model in which voters choose candidates under uncertainty and rely on endorsements from better informed sources. Newspapers are potentially biased in favor of one of the candidates and voters thus rationally account for the credibility of any endorsements. Our primary empirical finding is that endorsements are influential in the sense that voters are more likely to support the recommended candidate after publication of the endorsement. The degree of this influence, however, depends upon the credibility of the endorsement. In this way, endorsements for the Democratic candidate from left-leaning newspapers are less influential than are endorsements from neutral or right-leaning newspapers, and likewise for endorsements for the Republican. These findings suggest that voters do rely on the media for information during campaigns but that the extent of this reliance depends upon the degree and direction of any bias. |
| JEL: | D7 H0 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14445&r=pol |
| By: | Patricia Funk; Christina Gathmann |
| Abstract: | Using historical data for all Swiss cantons from 1890 to 2000, we estimate the causal effect of direct democracy on government spending. The main innovation in this paper is that we use fixed effects to control for unobserved heterogeneity and instrumental variables to address the potential endogeneity of institutions. We find that the budget referendum and lower costs to launch a voter initiative are effective tools in reducing canton level spending. However, we find no evidence that the budget referendum results in more decentralized government or a larger local government. Our instrumental variable estimates suggest that a mandatory budget referendum reduces the size of canton spending between 13 and 19 percent. A 1 percent lower signature requirement for the initiative reduces canton spending by up to 2 percent. |
| Keywords: | Direct Democracy, Fiscal Policy, Switzerland |
| JEL: | H11 N43 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1123&r=pol |
| By: | Joan Esteban; Esther Hauk |
| Abstract: | We extend the model of collective action in which groups compete for a budged by endogenizing the group platform, namely the specific mixture of public/private good and the distribution of the private good to group members which can be uniform or performance-based. While the group-optimal platform contains a degree of publicness that increases in group size and divides the private benefits uniformly, a success-maximizing leader uses incentives and distorts the platform towards more private benefits - a distortion that increases with group size. In both settings we obtain the anti-Olson type result that win probability increases with group size. |
| Keywords: | collective contests, leadership, group platform, incentives, sharing rules |
| JEL: | D70 D72 D74 |
| Date: | 2008–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:756.08&r=pol |
| By: | Julien Vauday (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | Firms are actively involved in the formation of policies. So far, the literature has focused on the relationship between exposure to the competition and the level of protection. The ability of lobbies to achieve a more favorable policy is then directly related to the reaction of their welfare to the policy. This monotonic relationship contradicts the idea that all lobbies do not have the same efficiency. Indeed, this efficiency cannot be uniquely driven by the exposure to competition. This paper proposes an original approach of the lobbying activity taking into account that lobbies' efficiency is heterogeneous. Just as there are some skilled and unskilled cards players. This paper highlights two types of efficiency, the passive and the active. First, according to the sensitivity of the government to the policy, two lobbies equally affected by the policy may pay different contributions to obtain the same protection level. Second, if the active efficiency is introduced, then two lobbies exhibiting the same sensitivity to the policy may obtain two different equilibrium policies. |
| Keywords: | Endogeneous policy decision, strategic lobbying, heterogeneous efficiency. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00331298_v1&r=pol |
| By: | Jan Kakes; Jasper de Winter |
| Abstract: | We investigate the determinants of Dutch households' preferences for income redistribution, using survey data. Our results show that support for redistributive policies is related to self-interest, exposure to misfortune and risk-aversion. In addition, people who believe that prosperity is primarily due to luck rather than hard work tend to favour redistribution, indicating that equal opportunities are considered important. Interestingly, support for redistributive policies is positively related to education, while the impact of age is ambiguous. This is an important outcome, as it implies that globalisation and skill-biased technological progress may put less pressure on the Dutch social security system than previously assumed. |
| Keywords: | Redistribution; social security. |
| JEL: | D31 D63 H23 H55 P16 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:179&r=pol |