We estimate the effects of the introduction of a large cash transfer programme on support for the ruling populist party in Poland. We exploit the variation at the municipal level in the annual cash transfer amount received per capita, and use a difference-in-differences research design to study the electoral effects of the transfer. Our results show that a cash transfer amount of $100 per capita translated into an increase in the vote share for the ruling party of nearly two percentage points. One-third of additional votes came from new voters coming off the sidelines, and the remaining electoral gains were due to voters who had previously voted for other parties. The effects of the programme are persistent, as we see no decrease in the magnitude of effects seven years after the introduction.
If large firms employ relatively more educated workers, will an increase in market concentration increase income inequality by raising the relative demand for skill? I use Swedish employer–employee data from 1997–2016 and find a strong correlation between firm size and the share of college-educated (‘skilled’) workers. An increase in a sector's market concentration is correlated with a higher skilled wage premium and higher relative employment of skilled workers. This is due mainly to the reallocation of workers across firms. I demonstrate how these findings can be explained by a model of heterogeneous firms where productivity and skill intensity are positively correlated.
There has been a growing interest in the theory of rational bubbles. Recent theories predict that bubbles are expansionary, but differ in the underlying mechanisms. This paper provides empirical evidence that helps us to assess different theories, and documents four main findings: stock market overvaluation is associated with (i) faster output and input growth, (ii) declining total factor productivity (TFP) growth, (iii) a greater contribution of labour and a declining contribution of TFP for output growth, (iv) an increase in the number of firms. Overall, these findings suggest that bubbly expansions are driven by increased factor accumulation (in particular labour), and not from higher productivity growth.