Economics: Research Guide

We provide evidence of a new channel through which politicians can exchange favors with campaign donors: earlier payment in procurement contracts. We exploit an electoral reform in Brazil that bans corporate contributions and partially breaks down the relationship between donors and politicians. Using a within-firm difference-in-differences identification strategy, we find that connected firms experience longer payment terms post-reform. The effect is larger in municipalities with low liquidity, where payment delays are more common, and for contracts awarded through a competitive tendering process. Our results point to the importance of designing rules that curb discretion over the contract ..

We explore the evolution and determinants of attitudes towards immigration in Canada, utilizing Canadian Election Studies surveys from 1988 to 2019. Our analysis indicates a notable trend: a consistent decrease in anti-immigrant sentiments until the mid-2000s, followed by a shift around 2008 towards gradually more negative attitudes towards immigration. To better understand the factors influencing these attitudes, we examine a comprehensive set of variables. While economic factors seem to have some association with these attitudes, our findings more significantly underscore the role of group-level socio-psychological factors. Additionally, our analysis identifies an emerging polarization alo..

The objective of this dissertation is to deepen our understanding of how large shareholders make decisions, since we recently experienced a significant increase in concentration of voting rights around the world, which has amplified their influence in corporate governance. Accordingly, this dissertation investigates the impact of the largest shareholder’s voting stake on corporate decisions across three distinct studies. The first study focuses on capital structure decisions, revealing a negative relationship between the voting stake of the largest shareholder and leverage. Family-controlled firms show a weaker association, emphasizing their desire to maintain control over the firm. The se..

We study Dutch taxpayers’ preferences in designing a social welfare system. With help of a choice experiment we ask 2000 respondents to make choices between policy packages, characterized by different levels of income for welfare recipients, of obligations, of sanctions, of earnings and gifts disregards, and of taxes for the average Dutch household. The results show that respondents are in favor of relatively generous benefits and disregards, but also find monitoring and activation very important. Both self-interest and altruism, as well as trust in the government, appear to shape respondents' preferences. Respondents’ preferences line up with their voting behavior.

Using administrative transactions data from the United Kingdom, we document a swift decline in sterling use among British exporters after the 2016 Brexit vote. Through a novel decomposition, we document most of this decline comes from two sources: (i) continuously-operating firms switching from sterling to dollars or local currencies and (ii) reductions in transactions for sterling-loyal firms. In contrast, new entrants into exporting primarily invoice in sterling before and after the Brexit vote. Our findings provide the first evidence on the quantitative relevance of new channels that contribute to changes in aggregate invoicing shares amidst political upheaval.

Majority voting is considered an efficient information aggregation mechanism in committee decision-making. We examine if this holds in environments where voters first need to acquire information from sources of varied quality and cost. In such environments, efficiency may depend on free-riding incentives and the ‘transparency’ regime - the knowledge voters have about other voters’ acquired information. Intuitively, more transparent regimes should improve efficiency. Our theoretical model instead demonstrates that under some conditions, less transparent regimes can match the rate of efficient information aggregation in more transparent regimes if all members cast a vote based on the inf..

We study information transmission through informal elections. Our leading example is that of protests in which there may be positive costs or benefits of participation. The aggregate turnout provides information to a policy maker. However, the presence of activists adds noise to the turnout. The interplay between noise and participation costs leads to strategic substitution and complementarity effects in citizens’ participation choices, and we characterize the implications for the informativeness of protests. In particular, we show that rather than being a friction, costs may facilitate information transmission by lending credibility to protest participation.

This paper characterizes optimal fiscal rules within a model integrating fiscal rule deviations in a two-period political turnover framework. The incumbent party aims to secure favored spending through increased debt issuance due to potential power loss. The study introduces spending and deviation rules, requiring legislative approval for deviations from the spending rule. Analysis shows the optimal deviation rule, favoring flexible responses to stringent spending rules. Furthermore, larger initial debt balances warrant tighter spending rules, while the optimal deviation rule remains unaffected. Additionally, political conflict inf luences deviation rule permissiveness, aligning more with th..

Dynasties constitute a visible sign of intergenerational persistence and raise questions about the legitimacy of the ruling elite. This paper uses data on graduates of elite colleges to explore the influence of political and business dynasties in France. I link nominative data on 103, 309 graduates of 12 French Grandes ´ Ecoles born between 1931 and 1975 to their professional careers as politicians with national-level mandates or as board members of French firms. Identifying lineage through surnames, I find that sons of political and business leaders were substantially more likely than their graduate peers to pursue elite careers themselves, revealing a social gradient in returns to elite e..

This paper extends the literature on the nexus between political geography and financial markets to the stock market volatility context by examining the interrelation between political geography and the predictive relation between the state- and aggregate-level stock market volatility via recently constructed measures of political alignment. Using monthly data for the period from February 1994 to March 2023 and a machine learning technique called random forests, we show that the importance of the state-level realized stock market volatilities as a driver of aggregate stock market volatility displays considerable cross- sectional dispersion as well as substantial variation over time, with the..

We review the literature on the effects of the 1965 Voting Rights Act (VRA), which removed formal restrictions to Black political participation. After a brief description of racial discrimination suffered by Black Americans since Reconstruction, we introduce the goals that the VRA was meant to achieve. Next, we discuss the local level impact of the law on political participation and representation, on public goods provision and policing practices, and on labor market outcomes. We then turn to whites’ reactions, from political realignment to electoral counter-mobilization to changes in voting rules and arrests patterns. We conclude by discussing how the evidence reviewed in this article can..

The paper explores the drivers of political fragility by focusing on coups d’état as symptomatic of such fragility. It uses event studies to identify factors that exhibit significantly different dynamics in the runup to coups, and machine learning to identify these stressors and more structural determinants of fragility—as well as their nonlinear interactions—that create an environment propitious to coups. The paper finds that the destabilization of a country’s economic, political or security environment—such as low growth, high inflation, weak external positions, political instability and conflict—set the stage for a higher likelihood of coups, with overlapping stressors amplif..

This paper looks at how downward socio-economic mobility of displaced workers is fueling the rise of right-wing populism. After a review of relevant literature on worker displacement and angst follows an analysis of its implications for US politics. Data from government sources suggest that displacement has contributed to the deeply conservative populism. Finally, survey data demonstrate those who are more subject to bouts of unemployment are more likely to believe that immigrants take jobs away from US citizens and that “free” trade agreements are not good for the US.

We document the importance of local information in mass media for the political engagement of citizens and accountability of politicians. We study this in the context of Canada, where until 1958, competition in television markets was suppressed—Canadians received either public or private television content, but never both. While public television provided national-level informational content, private television content was distinctly local and more politically relevant to voters. We find that the introduction of television reduced voter turnout, but that this effect is exclusive to public television districts. Our findings qualify existing knowledge about the political effects of the rollo..

We document the spiral of populism in Europe and the direct and indirect role of economic insecurity shocks. Using survey data on individual voting, we make two contributions to the literature. (i) Economic insecurity shocks have a significant impact on the populist vote share, directly as demand for protection, and indirectly through the induced changes in trust and attitudes. (ii) A key consequence of increased economic insecurity is a drop in turnout. The impact of this largely neglected turnout effect is substantial: conditional on voting, when economic insecurity increases, almost 40% of the induced change in the vote for a populist party comes from the turnout channel.

We study how partisan alignment across levels of government affects coalition formation and government stability using a regression discontinuity design and a large dataset of Spanish municipal elections. We document a positive effect of alignment on both government formation and stability. Alignment increases the probability that the most-voted party appoints the mayor and decreases the probability that the government is unseated during the term. Aligned parties also obtain sizeable electoral gains in the next elections. We show that these findings are not the consequence of favoritism in the allocation of transfers towards aligned governments.

We study the effect of local exposure to populism on net population movements by citizenship status, gender, age and education level in the context of Italian municipalities. We present two research designs to estimate the causal effect of populist attitudes and politics. Initially, we use a combination of collective memory and trigger variables as an instrument for the variation in populist vote shares across national elections. Subsequently, we apply a regression discontinuity design to estimate the effect of electing a populist mayor on population movements. We establish three converging findings. First, the exposure to both populist attitudes and policies, as manifested by the vote share..

This paper contributes to the political competition literature by providing empirical evidence of the influence of Double Simultaneous Voting System (DSVS) and Apparentment Lists (AL), in force in several Argentine districts since 1987, on party hegemony and the concentration of the party system. Results from a panel data of 9 gubernatorial elections and all 24 argentine subnational jurisdictions show that these electoral systems favor the persistence of the incumbent party in office, diminish the effective number of parties, and improve the probability of victory of the incumbent party. DSVS and AL generate a profusion of subgroups that take advantage of preexisting party fragmentation, cli..

Western democracies experienced in recent decades a transformation of the relationship between citizens and their representatives towards greater accountability and transparency. These demands led to the emergence of new regulations and anti-corruption institutions. However, it often remains unknown whether such institutions are able to secure public trust and legitimacy in order to fulfill their mission effectively. The paper investigates this question by focusing on France, which quickly became a leader in the fight against corruption after the launch in 2013 of the High Authority for the Transparency in Public Life (HATVP). We run a survey experiment among 3, 000 citizens and 33 experts t..

Politicians appeal to social groups to court their electoral support. However, quantifying which groups politicians refer to, claim to represent, or address in their public communication presents researchers with challenges. We propose a novel supervised learning approach for extracting group mentions in political texts. We first collect human annotations to determine the exact text passages that refer to social groups. We then fine-tune a Transformer language model for contextualized supervised classification at the word level. Applied to unlabeled texts, our approach enables researchers to automatically detect and extract word spans that contain group mentions. We illustrate our approach i..

Poor performance by the established political class can drive voters towards anti- establishment outsiders. Is the ineffectiveness of incumbent politicians an important driver of the recent rise of populist parties? We provide an empirical test exploiting a sharp discontinuity in the wage of local politicians as a function of population in Italian municipalities. We find that the more skilled local politicians and more effective local government in municipalities above the threshold cause a significant drop in voter support for the populist Five-Star Movement in regional and national elections. Support for incumbent governing parties increases instead.

We evaluate how traditional parties may respond to populist parties on issues aligning with populist messages. During the 2020 Italian referendum on the reduction of members of Parliament, we conducted a large-scale field experiment, exposing 200 municipalities to nearly a million impressions of programmatic advertisement. Our treatments comprised two video ads against the reform: one debunking populist rhetoric and another attributing blame to populist politicians. This anti-populist campaign proved effective through demobilization, as it reduced both turnout and the votes in favor of the reform. Notably, the effects were more pronounced in municipalities with lower rates of college graduat..

Using rural household survey data from West Bengal, we find that voters respond positively to excludable government welfare benefits but not to local public good programs, while reporting having benefited from both. Consistent with these voting patterns, shocks to electoral competition induced by exogenous redistricting of villages resulted in upper-tier governments manipulating allocations across local governments only for excludable benefit programs. Using a hierarchical budgeting model, we argue these results provide credible evidence of the presence of clientelism rather than programmatic politics.

Evidence on the electoral participation at the municipal level usually points to a detrimental effect of an enlarged size (due to amalgamation) at the following municipal elections. Contrary to previous studies, our results show an overall positive effect of amalgamation on municipal turnout: larger units do not necessarily vote less than smaller ones. In a quasi-experimental Difference-in-difference design following Callaway and Sant'Anna (2020), we find that the final municipal size per se does not explain turnout after amalgamation. Hence the traditional claim that a larger size should depress municipal turnout does not always hold. Cross- and within municipal heterogeneity emerges instea..

It has been argued that since 2014, under the BJP-led central government, welfare benefits in India have become better targeted and less prone to clientelistic control by state and local governments. Arguably this has helped to increase the vote share of the BJP vis-a-vis regional parties. We test these hypotheses using longitudinal data from 3500 rural households in the state of West Bengal. We fail to find evidence that the new “central” programs introduced after 2014 were better targeted than traditional “state” programs, or that the targeting of state programs improved after 2014. Households receiving the new “central” benefits introduced since 2014 were more likely to switch..

This paper examines the impact of bureaucracy on policy implementation in environments where electoral incentives generate pandering. A two-period model is developed to analyze the interactions between politicians and bureaucrats, who are categorized as either aligned -- sharing the voters' preferences over policies -- or intent on enacting policies that favor elite groups. The findings reveal equilibria in which aligned politicians resort to pandering, whereas aligned bureaucrats either support or oppose such behavior. The analysis further indicates that, depending on parameters, any level of bureaucratic influence can maximize the voters' welfare, ranging from scenarios with an all-powerfu..

The use of the Internet to access news has an impact on African citizens' perceptions of democracy. Using repeated cross-sectional data from the Afrobarometer survey across 35 African countries over the period 2011-2018, along with an instrumental variable approach, allows addressing potential endogeneity bias between Internet use and citizens' perceptions. The results indicate that using the Internet to obtain information has a significant negative effect on both the preference for and the perception of the extent of democracy. This negative effect is due to several factors. First, Internet use erodes trust in government institutions, mainly in the parliament and the ruling party. It increa..

A well-established finding from social psychology is that people tend to hold “false consensus beliefs”, that is, they regularly overestimate how many others agree with their own opinions. The consequences of such beliefs for how citizens assess democratic legitimacy have been left largely unexplored, however. We reason that false consensus beliefs may give citizens the erroneous impression that their political preferences are shared by most fellow citizens while political elites fail to follow this apparent will of the majority. False consensus beliefs might therefore play a central role in the development of populist attitudes to politics. Using original panel survey data from Germany,..

Science, long considered a cornerstone in shaping policy decisions, is increasingly vital in addressing contemporary societal challenges. However, it remains unclear whether science is used differently by policymakers with different partisan commitments. Here we combine large-scale datasets capturing science, policy, and their interactions, to systematically examine the partisan differences in the use of science in policy across both the federal government and ideological think tanks in the United States. We find that the use of science in policy documents has featured a roughly six-fold increase over the last 25 years, highlighting science’s growing relevance in policymaking. However, the..