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Session Overview
K06: Political Economy V
Friday, 20/Aug/2021:
12:30pm - 2:00pm

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12:30pm - 12:52pm

Politicians’ Neighborhoods: Where do they Live and does it Matter?

Olle Folke1, Linna Martén2, Johanna Rickne2, Matz Dahlberg1

1Uppsala University, Sweden; 2Stockholm University, Sweden

We use detailed population-wide data on the location of politicians’ and citizens' homes as well as their socioeconomic traits. We combine this information with neighborhood-level data on building permits and proposals to close schools. A descriptive analysis uncovers two features of local politicians' home neighborhoods. First, they have larger shares of socio-economically advantaged people in terms of income, education, immigrant status, and homeownership. Second, they have more voters for their own party. Next, we analyze whether having politicians in a neighborhood reduces the likelihood that local public "bads'' are placed there. This analysis compares home neighborhoods for politicians with different degrees of political power (ruling majority or opposition) in elections that were close. We find negative effects on approved building permits for multifamily homes and proposals to close schools. This result is not explained by voters' residential patterns, which makes undue favoritism a more likely explanation.

Folke-Politicians’ Neighborhoods-537.pdf

12:52pm - 1:15pm

Pre-Electoral Coalitions: Insights into the Creation of Political Parties

Rafael Hortala-Vallve1, Jaakko Meriläinen2, Janne Tukiainen3,4

1London School of Economics and Political Science; 2Instituto Tecnológico Autónomo de México; 3University of Turku; 4VATT Institute for Economic Research

We evaluate the causes and consequences of pre-electoral coalitions (PECs). In Finland, local elections use a proportional representation system with open lists, and parties may form joint lists. We document that PECs are more common between parties of equal size and similar ideology, and when elections are more disproportional or involve more parties. Using both difference-in-differences and density discontinuity designs we document that voters punish coalescing parties, especially if they are ideologically diverse, and also respond to PECs by targeting personal votes strategically within the PECs. Moreover, small parties become more likely to acquire political leadership positions. Finally, PECs seem to be formed also with the particular purpose of influencing the overall distribution of political power: they lead to more dispersed seat distributions and prevent absolute majorities in close elections. Thus, voter ideology and electoral rules create natural boundaries for the parties, but the party formateurs also consider wider impacts.

Hortala-Vallve-Pre-Electoral Coalitions-234.pdf

1:15pm - 1:37pm

Term Limits: A New Political Scene or Business as Usual?

Catarina Alvarez1, Mariana Lopes da Fonseca2

1Nova School of Business and Economics, Portugal; 2University of St. Gallen

This study investigates empirically the selection effects of the introduction of term limits. That is, whether term limits, by creating more rotation in power, lead to the entry and selection of better politicians. Our contribution is twofold: we construct an extensive and unique dataset on Portuguese mayors' personal characteristics and we take advantage of a recent reform introducing mayoral term limits in Portugal to causally identify the impact on political selection. Our identification strategy relies on a difference-in-differences approach estimating how mayors' personal characteristics differ on average between municipalities with re-eligible and term-limited incumbents. The baseline results show that, after the reform, treated municipalities elected politicians older and with a past political career, on average. This suggests that before the implementation of term limits, being a mayor in Portugal could be considered as a career path, which one would start at a young age and with no previous political experience.

Alvarez-Term Limits-342.pdf

1:37pm - 2:00pm

Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism

Stephan A. Schneider1, Sven Kunze2

1ETH Zürich, Switzerland; 2Heidelberg University

Allocation decisions are vulnerable to political influence, but it is unclear in which situations politicians use their discretionary power in a partisan manner. We analyze the allocation of presidential disaster declarations in the United States, exploiting the spatiotemporal randomness of all hurricane strikes from 1965-2018. We show that biased declaration behavior is not politically affordable if a disaster is either very strong or weak, when relief provision is clearly necessary or not. However, in ambiguous situations, after medium-intensity hurricanes, presidents favor areas governed by their co-partisans. Our nonlinear estimations demonstrate that this hump-shaped alignment bias exceeds average estimates up to eightfold.

Schneider-Disastrous Discretion-380.pdf

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