Pub Date : 2025-12-24DOI: 10.1016/j.jebo.2025.107382
Caroline Perrin , Florian Léon , Francis Osei-Tutu
Does firm managers’ perception of political instability influence firms’ investment decisions? Using a large firm-level survey data of over 147,000 firms operating in 153 countries, we find evidence that a higher perception of political instability is positively related to firms’ investments. This effect is observed both on the extensive margin (likelihood to invest) and intensive margin (amount invested) and for investment in both land and equipment. Perception of political instability also influence how firms finance their investments: firms hold more cash on hand and borrow more from banks when they perceive political instability to be high. We also document that this effect is only observable for small and medium enterprises and those operating in less democratic regimes. The actual level of political instability in a country, however, has no effect on firm investment. Our results are robust to a battery of sensitivity tests.
{"title":"Seeing risk, seizing opportunity: How perceived political instability affects firm investment","authors":"Caroline Perrin , Florian Léon , Francis Osei-Tutu","doi":"10.1016/j.jebo.2025.107382","DOIUrl":"10.1016/j.jebo.2025.107382","url":null,"abstract":"<div><div>Does firm managers’ perception of political instability influence firms’ investment decisions? Using a large firm-level survey data of over 147,000 firms operating in 153 countries, we find evidence that a higher perception of political instability is positively related to firms’ investments. This effect is observed both on the extensive margin (likelihood to invest) and intensive margin (amount invested) and for investment in both land and equipment. Perception of political instability also influence how firms finance their investments: firms hold more cash on hand and borrow more from banks when they perceive political instability to be high. We also document that this effect is only observable for small and medium enterprises and those operating in less democratic regimes. The actual level of political instability in a country, however, has no effect on firm investment. Our results are robust to a battery of sensitivity tests.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107382"},"PeriodicalIF":2.3,"publicationDate":"2025-12-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-24DOI: 10.1016/j.jebo.2025.107356
Klara Kinnl, Ulrich Wohak
We study price and volume effects of value-added tax (VAT) reductions for period products. We exploit varying treatment intensities and timing in several European countries and find that prices decrease by 10–13 %. This corresponds to full pass-through 12 months after the VAT reduction. The average effect on aggregate purchase volumes is statistically zero, and we find no evidence that low-income households are disproportionately affected by the reforms. We find homogeneous pass-through for market- and product-level competition measures and provide suggestive evidence that households’ propensity to purchase branded products increases in the months after the tax reform.
{"title":"Free the period? Evaluating tampon tax reforms using household scanner data","authors":"Klara Kinnl, Ulrich Wohak","doi":"10.1016/j.jebo.2025.107356","DOIUrl":"10.1016/j.jebo.2025.107356","url":null,"abstract":"<div><div>We study price and volume effects of value-added tax (VAT) reductions for period products. We exploit varying treatment intensities and timing in several European countries and find that prices decrease by 10–13 %. This corresponds to full pass-through 12 months after the VAT reduction. The average effect on aggregate purchase volumes is statistically zero, and we find no evidence that low-income households are disproportionately affected by the reforms. We find homogeneous pass-through for market- and product-level competition measures and provide suggestive evidence that households’ propensity to purchase branded products increases in the months after the tax reform.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107356"},"PeriodicalIF":2.3,"publicationDate":"2025-12-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840022","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Forest conservation is a key strategy for addressing climate change. However, the role of women’s political representation in shaping conservation outcomes remains understudied. This paper examines the causal impact of female legislators on forest cover in India, leveraging a regression discontinuity design based on close mixed-gender electoral races. We find that electing a female legislator increases annual forest cover growth by 6 percentage points, but this effect is concentrated in constituencies reserved for candidates from historically marginalized groups. When we examine forest cover growth over the entire electoral cycle, the positive impact of female legislators is found for all constituencies, but this effect continues to be driven by constituencies reserved for historically disadvantaged communities. These findings suggest that women in political office can significantly influence environmental outcomes, particularly when institutional structures promote the inclusion of underrepresented groups. We argue that differences in environmental preferences and constraints by legislator identity may explain these effects. Our results underscore the importance of legislator identity in shaping environmental governance.
{"title":"Female legislators and forest conservation in India","authors":"Sutirtha Bandyopadhyay , Pranabes Probeshika Dutta , Naveen Hari , Bipasha Maity","doi":"10.1016/j.jebo.2025.107375","DOIUrl":"10.1016/j.jebo.2025.107375","url":null,"abstract":"<div><div>Forest conservation is a key strategy for addressing climate change. However, the role of women’s political representation in shaping conservation outcomes remains understudied. This paper examines the causal impact of female legislators on forest cover in India, leveraging a regression discontinuity design based on close mixed-gender electoral races. We find that electing a female legislator increases annual forest cover growth by 6 percentage points, but this effect is concentrated in constituencies reserved for candidates from historically marginalized groups. When we examine forest cover growth over the entire electoral cycle, the positive impact of female legislators is found for all constituencies, but this effect continues to be driven by constituencies reserved for historically disadvantaged communities. These findings suggest that women in political office can significantly influence environmental outcomes, particularly when institutional structures promote the inclusion of underrepresented groups. We argue that differences in environmental preferences and constraints by legislator identity may explain these effects. Our results underscore the importance of legislator identity in shaping environmental governance.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107375"},"PeriodicalIF":2.3,"publicationDate":"2025-12-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840021","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-20DOI: 10.1016/j.jebo.2025.107379
Peter Brummund , Michael D. Makowsky
Participation in social groups ties members to local communities. Employers can capture these benefits as rents when geographically-specific club goods raise the cost of labor mobility. We measure ties to local clubs using the shares of households identifying with a minority religion, enrollment of children in Islamic schools, and membership in secular savings clubs. We identify larger wage markdowns where households have stronger ties to local club goods. Complementarity between labor market concentration and club goods offers an explanation of rising wage markdowns absent increases in concentration, while adding to the difficulty in separating monopsony rents from compensating wage differentials.
{"title":"Labor market monopsony and local clubs: Evidence from Indonesia","authors":"Peter Brummund , Michael D. Makowsky","doi":"10.1016/j.jebo.2025.107379","DOIUrl":"10.1016/j.jebo.2025.107379","url":null,"abstract":"<div><div>Participation in social groups ties members to local communities. Employers can capture these benefits as rents when geographically-specific club goods raise the cost of labor mobility. We measure ties to local clubs using the shares of households identifying with a minority religion, enrollment of children in Islamic schools, and membership in secular savings clubs. We identify larger wage markdowns where households have stronger ties to local club goods. Complementarity between labor market concentration and club goods offers an explanation of rising wage markdowns absent increases in concentration, while adding to the difficulty in separating monopsony rents from compensating wage differentials.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107379"},"PeriodicalIF":2.3,"publicationDate":"2025-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790281","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-19DOI: 10.1016/j.jebo.2025.107380
Estefanía Galván, Victoria Tenenbaum
Despite progress in women’s participation in science, significant gender gaps persist in the advancement and consolidation of their academic careers. This paper investigates the effect of parenthood on the academic trajectories of male and female scientists. We combine data from a standardized curriculum system, containing longitudinal information on academic achievements of the full population of researchers in Uruguay, with administrative records of academic positions and childbirth demographics. Using an event study approach around the birth date of the first child, we find that parenthood imposes a significant penalty on scientific productivity of mothers but not on that of fathers. On average mothers productivity declines by 17 %, which is equivalent to publishing three fewer articles than fathers in the ten years following childbirth. This penalty is particularly pronounced for women who had their first child before completing their PhD. Additionally, we provide novel evidence of a child penalty in the number of conference presentations by mothers, primarily driven by a sharp decline in the probability of attending international academic events. As a consequence of these motherhood penalties in academic productivity, we find that fathers are more likely to be promoted to higher academic positions in the years following childbirth. These findings suggest that the unequal impact of parenthood on academic trajectories of male and female researchers is an important source of gender gaps in the scientific field.
{"title":"Gender gaps in academia: The role of children","authors":"Estefanía Galván, Victoria Tenenbaum","doi":"10.1016/j.jebo.2025.107380","DOIUrl":"10.1016/j.jebo.2025.107380","url":null,"abstract":"<div><div>Despite progress in women’s participation in science, significant gender gaps persist in the advancement and consolidation of their academic careers. This paper investigates the effect of parenthood on the academic trajectories of male and female scientists. We combine data from a standardized curriculum system, containing longitudinal information on academic achievements of the full population of researchers in Uruguay, with administrative records of academic positions and childbirth demographics. Using an event study approach around the birth date of the first child, we find that parenthood imposes a significant penalty on scientific productivity of mothers but not on that of fathers. On average mothers productivity declines by 17 %, which is equivalent to publishing three fewer articles than fathers in the ten years following childbirth. This penalty is particularly pronounced for women who had their first child before completing their PhD. Additionally, we provide novel evidence of a child penalty in the number of conference presentations by mothers, primarily driven by a sharp decline in the probability of attending international academic events. As a consequence of these motherhood penalties in academic productivity, we find that fathers are more likely to be promoted to higher academic positions in the years following childbirth. These findings suggest that the unequal impact of parenthood on academic trajectories of male and female researchers is an important source of gender gaps in the scientific field.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107380"},"PeriodicalIF":2.3,"publicationDate":"2025-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790282","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-19DOI: 10.1016/j.jebo.2025.107387
John VC Nye, Maksym Bryukhanov, Cheryl Litman, Sergiy Polyachenko
Nowadays very little attention has been paid to the worldwide and cross-generation stabilitsy of the relationship between education and pro-market preferences. More importantly, does economic development condition the effect of education on pro-market views? Using data from international surveys (WVS, LITS, ESS, ISSP), the Russian national longitudinal survey (RLMS-HSE) and the Russian survey of Trajectories in Education and Careers (TREC), we show that there is a robust positive relationship between education and free market views in most developed and developing countries. Notably, in the former Soviet Union, the link between more education and greater support for liberal market values holds for both the post-Soviet educated young and the old, who presumably received their education under the Soviet Union. Thus, education is not only correlated with higher support for liberal market values worldwide but, even in the case of the USSR with its anti-market educational content, a change in required years of schooling saw an increase in pro-market sentiment among those people affected.
{"title":"Education and market liberal preferences","authors":"John VC Nye, Maksym Bryukhanov, Cheryl Litman, Sergiy Polyachenko","doi":"10.1016/j.jebo.2025.107387","DOIUrl":"10.1016/j.jebo.2025.107387","url":null,"abstract":"<div><div>Nowadays very little attention has been paid to the worldwide and cross-generation stabilitsy of the relationship between education and pro-market preferences. More importantly, does economic development condition the effect of education on pro-market views? Using data from international surveys (WVS, LITS, ESS, ISSP), the Russian national longitudinal survey (RLMS-HSE) and the Russian survey of Trajectories in Education and Careers (TREC), we show that there is a robust positive relationship between education and free market views in most developed and developing countries. Notably, in the former Soviet Union, the link between more education and greater support for liberal market values holds for both the post-Soviet educated young and the old, who presumably received their education under the Soviet Union. Thus, education is not only correlated with higher support for liberal market values worldwide but, even in the case of the USSR with its anti-market educational content, a change in required years of schooling saw an increase in pro-market sentiment among those people affected.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107387"},"PeriodicalIF":2.3,"publicationDate":"2025-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790283","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-19DOI: 10.1016/j.jebo.2025.107377
Yalin Tang , Chengfang Liu , Yingquan Song
Since its inception in 2009, the One Village One Preschool (OVOP) initiative has emerged as one of China’s most extensive social experiments in rural early childhood education (ECE), distinguished by stringent teacher entry standards and sustained professional development. Utilizing variations in OVOP’s access cross villages and cohorts, we find that high-school-aged students exposed to OVOP have gained human capital benefits. Specifically, an additional one-year of OVOP exposure generates a 4.6 percentage point (pp) increase in the likelihood of attending selective senior high schools and a 3.8 pp reduction in the probability of grade retention. Further examination suggests that the quality of OVOP centers, particularly teacher qualifications, plays a crucial role in generating these benefits. Moreover, the program’s impact is mediated through boosting preschool skill development and subsequent academic performance in compulsory education. Notably, students from upper-middle ability distribution derive more substantial benefits from OVOP exposure. Finally, a preliminary benefit-cost analysis indicates a return of at least 4.1:1 on OVOP investments, with the marginal value of public funds spanning from 6.2 to infinity. These findings underscore the efficacy of OVOP as a scalable model for enhancing educational equity and human capital development in rural China.
{"title":"The long-run human capital benefits of the one-village-one-preschool pilot in rural northwestern China","authors":"Yalin Tang , Chengfang Liu , Yingquan Song","doi":"10.1016/j.jebo.2025.107377","DOIUrl":"10.1016/j.jebo.2025.107377","url":null,"abstract":"<div><div>Since its inception in 2009, the One Village One Preschool (OVOP) initiative has emerged as one of China’s most extensive social experiments in rural early childhood education (ECE), distinguished by stringent teacher entry standards and sustained professional development. Utilizing variations in OVOP’s access cross villages and cohorts, we find that high-school-aged students exposed to OVOP have gained human capital benefits. Specifically, an additional one-year of OVOP exposure generates a 4.6 percentage point (pp) increase in the likelihood of attending selective senior high schools and a 3.8 pp reduction in the probability of grade retention. Further examination suggests that the quality of OVOP centers, particularly teacher qualifications, plays a crucial role in generating these benefits. Moreover, the program’s impact is mediated through boosting preschool skill development and subsequent academic performance in compulsory education. Notably, students from upper-middle ability distribution derive more substantial benefits from OVOP exposure. Finally, a preliminary benefit-cost analysis indicates a return of at least 4.1:1 on OVOP investments, with the marginal value of public funds spanning from 6.2 to infinity. These findings underscore the efficacy of OVOP as a scalable model for enhancing educational equity and human capital development in rural China.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107377"},"PeriodicalIF":2.3,"publicationDate":"2025-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790284","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A substantial body of economic literature has examined the impact of employment protection legislation (EPL) on various firm-level outcomes. We complement this literature by studying the impact of reducing employment protection on the internationalization of small and medium-sized enterprises (SMEs) and their participation in Global Value Chains (GVCs). Exploiting a comprehensive survey on Italian firms, we first assess how firms’ engagement in complex international activities has been affected by the 2012 Labor Market Reform, the so-called “Fornero Law”, which reduced firing costs for firms above the 15-employee threshold. Then, we evaluate the impact of the same reform on firms' participation and governance structure in global value chains. We find a positive effect of EPL retrenchment on complex international activities of SMEs. We also highlight that the positive effect on internationalization is greater in firms with a higher level of volatility. Finally, we find a positive effect of the reduction in EPL on firms’ participation in GVCs, particularly in a governance mode characterized by short-term relationships with foreign companies.
{"title":"The effect of employment protection legislation on the internationalization of SMEs and their participation in global value chains","authors":"Teresa Barbieri , Francesco Devicienti , Alessandro Manello , Davide Vannoni","doi":"10.1016/j.jebo.2025.107388","DOIUrl":"10.1016/j.jebo.2025.107388","url":null,"abstract":"<div><div>A substantial body of economic literature has examined the impact of employment protection legislation (EPL) on various firm-level outcomes. We complement this literature by studying the impact of reducing employment protection on the internationalization of small and medium-sized enterprises (SMEs) and their participation in Global Value Chains (GVCs). Exploiting a comprehensive survey on Italian firms, we first assess how firms’ engagement in complex international activities has been affected by the 2012 Labor Market Reform, the so-called “Fornero Law”, which reduced firing costs for firms above the 15-employee threshold. Then, we evaluate the impact of the same reform on firms' participation and governance structure in global value chains. We find a positive effect of EPL retrenchment on complex international activities of SMEs. We also highlight that the positive effect on internationalization is greater in firms with a higher level of volatility. Finally, we find a positive effect of the reduction in EPL on firms’ participation in GVCs, particularly in a governance mode characterized by short-term relationships with foreign companies.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107388"},"PeriodicalIF":2.3,"publicationDate":"2025-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790285","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-18DOI: 10.1016/j.jebo.2025.107383
Raphael Brade , Oliver Himmler , Robert Jäckle
We present first evidence that relative feedback can improve both the speed and quality of university graduation. Providing students with ongoing relative feedback on accumulated course credits – a measure of progress toward degree completion – increases the likelihood of graduating within one year of the officially scheduled study duration by 3.7 percentage points (an 8 % increase), thus accelerating graduation by 0.15 semesters (0.12 SD). Importantly, this does not lead to a decline in performance: grades improve by 0.063 SD. There are, however, distributional implications that policymakers need to consider: outcomes of students with medium pre-treatment graduation probabilities improve when the feedback informs them of an above-average performance – otherwise, their outcomes deteriorate. Combined with survey evidence, the pattern of results suggests that learning about own ability is a plausible mechanism.
{"title":"No student left behind? Relative feedback and university completion","authors":"Raphael Brade , Oliver Himmler , Robert Jäckle","doi":"10.1016/j.jebo.2025.107383","DOIUrl":"10.1016/j.jebo.2025.107383","url":null,"abstract":"<div><div>We present first evidence that relative feedback can improve both the speed and quality of university graduation. Providing students with ongoing relative feedback on accumulated course credits – a measure of progress toward degree completion – increases the likelihood of graduating within one year of the officially scheduled study duration by 3.7 percentage points (an 8 % increase), thus accelerating graduation by 0.15 semesters (0.12 SD). Importantly, this does not lead to a decline in performance: grades improve by 0.063 SD. There are, however, distributional implications that policymakers need to consider: outcomes of students with medium pre-treatment graduation probabilities improve when the feedback informs them of an above-average performance – otherwise, their outcomes deteriorate. Combined with survey evidence, the pattern of results suggests that learning about own ability is a plausible mechanism.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107383"},"PeriodicalIF":2.3,"publicationDate":"2025-12-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790286","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-15DOI: 10.1016/j.jebo.2025.107386
André Quintas , Peter Boettke
In the wake of the Cold War, liberal democracy was heralded by Francis Fukuyama as the “end of history”, the only viable form of human governance. Three decades later, that triumphalism has faded. Liberal democratic capitalism now faces mounting criticism, particularly for enabling cronyism. In response to this, Munger and Villarreal-Diaz pose one of the most important questions in contemporary political economy: “Does capitalism in a democracy always devolve into corporatist cronyism?” They answer in the affirmative. This paper revisits their question and offers a more precise thesis: it is not democracy per se but its current institutional form that fosters cronyism. Democracy is a normative commitment to viewing one another as dignified equals, but how that commitment is realized is a matter of continual debate and institutional design. We further argue that the democratic system itself generates a backlash against cronyism in the form of populist movements. However, while these movements claim to restore power to the people and dismantle elite privilege, under existing institutional constraints, they reproduce the very pathologies they oppose. Current democratic institutions, then, suffer from a double failure: they breed cronyism, and the populist response they provoke deepens it. In short, in the current institutional setting, there is no endogenous path out of cronyism. Does this mean democracy is inherently incompatible with capitalism? We argue that it is not. The problem lies in how democracy is institutionalized. Drawing mainly on the works of James Buchanan, F.A. Hayek, Vincent Ostrom, and Don Lavoie, we outline an alternative vision for democracy.
{"title":"Crony capitalism, populism, and democracy","authors":"André Quintas , Peter Boettke","doi":"10.1016/j.jebo.2025.107386","DOIUrl":"10.1016/j.jebo.2025.107386","url":null,"abstract":"<div><div>In the wake of the Cold War, liberal democracy was heralded by Francis Fukuyama as the “end of history”, the only viable form of human governance. Three decades later, that triumphalism has faded. Liberal democratic capitalism now faces mounting criticism, particularly for enabling cronyism. In response to this, Munger and Villarreal-Diaz pose one of the most important questions in contemporary political economy: <em>“Does capitalism in a democracy always devolve into corporatist cronyism?”</em> They answer in the affirmative. This paper revisits their question and offers a more precise thesis: it is not democracy <em>per se</em> but its current institutional form that fosters cronyism. Democracy is a normative commitment to viewing one another as dignified equals, but how that commitment is realized is a matter of continual debate and institutional design. We further argue that the democratic system itself generates a backlash against cronyism in the form of populist movements. However, while these movements claim to restore power to the people and dismantle elite privilege, under existing institutional constraints, they reproduce the very pathologies they oppose. Current democratic institutions, then, suffer from a double failure: they breed cronyism, and the populist response they provoke deepens it. In short, in the current institutional setting, there is no endogenous path out of cronyism. Does this mean democracy is inherently incompatible with capitalism? We argue that it is not. The problem lies in how democracy is institutionalized. Drawing mainly on the works of James Buchanan, F.A. Hayek, Vincent Ostrom, and Don Lavoie, we outline an alternative vision for democracy.</div></div>","PeriodicalId":48409,"journal":{"name":"Journal of Economic Behavior & Organization","volume":"241 ","pages":"Article 107386"},"PeriodicalIF":2.3,"publicationDate":"2025-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790287","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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