Explanations for the successful expansion and consolidation of the European Union and its legal system have long emphasized the importance of domestic courts’ sending preliminary references to the Court of Justice. Key to many of these theoretical accounts is the claim that domestic courts are better equipped than the Court of Justice to compel national governments to comply with EU law. Integrating insights from the comparative judicial politics literature into the context of the EU's preliminary references system, we provide a theoretical and empirical foundation for this claim by arguing that incorporating domestic courts into the EU legal process enhances public support for expansive judicial interpretations of EU law. We go on to argue, however, that this transfer of legitimacy depends on citizens’ views of the national and European courts. We support our argument with evidence from a preregistered survey experiment fielded in Germany.
What are the distributional consequences of migration, and how do they affect attitudes toward migration? In this paper we leverage a natural experiment generated by the ousting of former Libyan dictator Muammar Gaddafi, which created an unprecedented influx of economic migrants from African countries to Europe. This surge of low-skilled labor benefited low-productivity firms by lowering their production costs and expanding their labor supply. Employing a triple difference-in-differences design, we document that attitudes toward migration became more positive in Western European regions with large shares of migrants and low-productivity firms. Evidence from Sweden, which provides finely grained geographical data, confirms these findings. We then test the economic microfoundations of this attitudinal shift. We show that the surge in the supply of low-skilled labor increased the profitability of low-productivity firms more in areas that experienced larger migration flows. We find no evidence that migration worsened natives’ labor market conditions.
Intense debate surrounds the effects of trade on voting, yet less attention has been paid to how fluctuations in the real exchange rate may influence elections. A moderately overvalued currency enhances consumers’ purchasing power, yet extreme overvaluation threatens exports and economic growth. We therefore expect exchange rates to have a conditional effect on elections: when a currency is undervalued, voters will punish incumbents for further depreciations; yet when it is highly overvalued, they may reward incumbents for depreciation. We empirically explore our argument in three steps. First, we examine up to 412 elections in up to 59 democratic countries and show that voters generally punish depreciation in the real exchange rate when the currency is undervalued. We also find that at extremely high levels of currency overvaluation, voters sometimes reward incumbents for depreciation. A currency peg, especially in the eurozone, appears to insulate incumbents from these effects. In a second step, we explore the microfoundations of the election results through survey experiments in three advanced industrialized and two emerging market nations with different monetary and exchange rate policies and institutions. Respondents in countries with undervalued to mildly overvalued currencies disapprove of currency depreciations, whereas those facing a very highly overvalued currency favor depreciation. Third, we examine the mechanism of political competition in exchange rate policymaking and demonstrate that sustained undervaluation is rare in countries with strong political competition. Democratic governments have electoral incentives to avoid using undervalued currencies as a means of shielding workers from import competition.
What happens to a public, domestic institution when its authority is delegated to a privately run, transnational institution? I argue that outsourcing traditionally national legal responsibilities to transnational bodies can lead to the stagnation of domestic institutional capacity. I examine this through a study of international commercial arbitration (ICA), a widely used system of cross-border commercial dispute resolution. I argue that ICA provides commercial actors an “exit option” from weak public institutions, reducing pressure on the state to invest in capacity-enhancing reform. I find that the enactment of strong protections for ICA leads to the gradual erosion of the capacity of domestic legal institutions, particularly in countries with already weak legal systems. I test the mechanism driving this dynamic using dispute data from the International Chamber of Commerce. I find that pro-arbitration laws increase the use of international arbitration by national firms, suggesting that firms use ICA as an escape from domestic institutions. This article contributes to debates on globalization and development as well as work on the second-order effects of global governance institutions.