Pub Date : 2025-12-01Epub Date: 2025-09-15DOI: 10.1016/j.ejpoleco.2025.102737
Linghui Han
This paper argues that political and market concentration levels explain why developing economies often underinvest in institutional infrastructure and legal capacity. Economic growth challenges this equilibrium, incentivizing rulers to invest in institutional infrastructure complementary to physical infrastructure. Rulers jointly invest to expand market entry and size only if they can secure higher rents and preserve institutions favoring concentration. The theoretical model predicts that physical infrastructure investment grows faster than institutional investment as market concentration rises. Using provincial coal reserve shares as an instrument for market concentration, a difference-in-differences analysis of Chinese data from 1997 to 2006 shows that the fiscal expenditure ratio of physical to institutional infrastructure increased 78% faster in provinces within the top market concentration quartile in 2000—the year before China joined the WTO.
{"title":"Physical vs. institutional public goods provision: Evidence from China","authors":"Linghui Han","doi":"10.1016/j.ejpoleco.2025.102737","DOIUrl":"10.1016/j.ejpoleco.2025.102737","url":null,"abstract":"<div><div>This paper argues that political and market concentration levels explain why developing economies often underinvest in institutional infrastructure and legal capacity. Economic growth challenges this equilibrium, incentivizing rulers to invest in institutional infrastructure complementary to physical infrastructure. Rulers jointly invest to expand market entry and size only if they can secure higher rents and preserve institutions favoring concentration. The theoretical model predicts that physical infrastructure investment grows faster than institutional investment as market concentration rises. Using provincial coal reserve shares as an instrument for market concentration, a difference-in-differences analysis of Chinese data from 1997 to 2006 shows that the fiscal expenditure ratio of physical to institutional infrastructure increased 78% faster in provinces within the top market concentration quartile in 2000—the year before China joined the WTO.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102737"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145060696","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 : 2025-12-01Epub Date: 2025-09-26DOI: 10.1016/j.ejpoleco.2025.102750
Jac C. Heckelman, Bonnie Wilson
Employing a political economy perspective, we seek to understand the seeming failure of aid to promote institutional reform. À la Stigler’s theory of regulatory capture, we suppose that institutions are determined via a process of exchange and that special interest groups may capture institutions. We interpret grants of aid as a shock to the market for institutions and hypothesize that the impact of aid on institutional reform is conditional on the influence of groups. Based on a panel of 92 aid-receiving nations, we find evidence consistent with a political economy perspective and our hypothesis. In particular, we find that aid has had a positive impact on reform in countries with especially low levels of market-orientation in institutions and middling to large numbers of groups, and that aid has been associated with back-sliding on reform in many countries with high levels of market-orientation in institutions.
{"title":"Aid, Reform, and Interest groups","authors":"Jac C. Heckelman, Bonnie Wilson","doi":"10.1016/j.ejpoleco.2025.102750","DOIUrl":"10.1016/j.ejpoleco.2025.102750","url":null,"abstract":"<div><div>Employing a political economy perspective, we seek to understand the seeming failure of aid to promote institutional reform. À la Stigler’s theory of regulatory capture, we suppose that institutions are determined via a process of exchange and that special interest groups may capture institutions. We interpret grants of aid as a shock to the market for institutions and hypothesize that the impact of aid on institutional reform is conditional on the influence of groups. Based on a panel of 92 aid-receiving nations, we find evidence consistent with a political economy perspective and our hypothesis. In particular, we find that aid has had a positive impact on reform in countries with especially low levels of market-orientation in institutions and middling to large numbers of groups, and that aid has been associated with back-sliding on reform in many countries with high levels of market-orientation in institutions.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102750"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145158695","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 : 2025-12-01Epub Date: 2025-09-12DOI: 10.1016/j.ejpoleco.2025.102746
Lesly Cassin , Paolo Melindi-Ghidi , Fabien Prieur
This article analyzes the impact of income inequality on environmental policy in the presence of green consumers. We first perform an empirical analysis using a panel of European countries over the period 1995–2021. The results show a negative relationship between inequality and public environmental expenditure, which is weaker with higher inequality. We also find a negative correlation between environmental expenditure and green consumption, that highlights the substitutable nature of the relationship between the two variables. We next develop a model with two main ingredients: citizens with different income capacities have access to two commodities that differ in terms of environmental impact, and they vote on the environmental policy. In equilibrium, the population is divided into two groups, conventional vs green consumers. An increase in inequality raises the marginal cost of policy through size and composition effects. The higher the equilibrium tax, the larger the overall effect. This provides us with an explanation of the main empirical result.
{"title":"The impact of income inequality on public environmental expenditure with green consumers","authors":"Lesly Cassin , Paolo Melindi-Ghidi , Fabien Prieur","doi":"10.1016/j.ejpoleco.2025.102746","DOIUrl":"10.1016/j.ejpoleco.2025.102746","url":null,"abstract":"<div><div>This article analyzes the impact of income inequality on environmental policy in the presence of green consumers. We first perform an empirical analysis using a panel of European countries over the period 1995–2021. The results show a negative relationship between inequality and public environmental expenditure, which is weaker with higher inequality. We also find a negative correlation between environmental expenditure and green consumption, that highlights the substitutable nature of the relationship between the two variables. We next develop a model with two main ingredients: citizens with different income capacities have access to two commodities that differ in terms of environmental impact, and they vote on the environmental policy. In equilibrium, the population is divided into two groups, conventional <em>vs</em> green consumers. An increase in inequality raises the marginal cost of policy through size and composition effects. The higher the equilibrium tax, the larger the overall effect. This provides us with an explanation of the main empirical result.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102746"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145109720","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 : 2025-12-01Epub Date: 2025-09-10DOI: 10.1016/j.ejpoleco.2025.102754
Nicola Nones
Do individual policy-makers matter for fiscal policy and, if so, under which conditions do they matter the most? Does a formal training in economics lead policymakers to implement a distinct set of fiscal policies? Do economists-turned-policymakers follow through with what they presumably teach in their classroom? This article aims to answer these questions with respect to fiscal consolidation (austerity) by analyzing a sample of Western and European countries between 1978 and 2019. By focusing on a subset of fiscal policies that are weakly orthogonal to the business cycle, I abstract from the most contentious debates in macroeconomics which revolve around the ‘best’ fiscal response to economic shocks (the infamous austerity vs stimulus debate). As such, I investigate the effects of economists on fiscal policy in a most-likely-case approach, i.e. when economic theory is by and large in agreement on what the best course of action is. Across a variety of specifications, modeling choices, estimators, and temporal and spatial sub-samples, I find no evidence that either the Head of the Executive or the Finance Minister's formal education in economics is (unconditionally) associated with fiscal consolidation policy. Nevertheless, the analysis reveals some political and institutional conditions under which economists-turned-Heads of Government are indeed more likely to implement fiscal consolidation. Governments led by economists are more likely to implement fiscal consolidation when the government is less fractionalized, when they are supported by a parliamentary majority, and when there are fewer institutional constraints on the executive.
{"title":"Do as I say, not as I do? Economists policymakers and fiscal consolidation","authors":"Nicola Nones","doi":"10.1016/j.ejpoleco.2025.102754","DOIUrl":"10.1016/j.ejpoleco.2025.102754","url":null,"abstract":"<div><div>Do individual policy-makers matter for fiscal policy and, if so, under which conditions do they matter the most? Does a formal training in economics lead policymakers to implement a distinct set of fiscal policies? Do economists-turned-policymakers follow through with what they presumably teach in their classroom? This article aims to answer these questions with respect to fiscal consolidation (austerity) by analyzing a sample of Western and European countries between 1978 and 2019. By focusing on a subset of fiscal policies that are weakly orthogonal to the business cycle, I abstract from the most contentious debates in macroeconomics which revolve around the ‘best’ fiscal response to economic shocks (the infamous austerity vs stimulus debate). As such, I investigate the effects of economists on fiscal policy in a most-likely-case approach, i.e. when economic theory is by and large in agreement on what the best course of action is. Across a variety of specifications, modeling choices, estimators, and temporal and spatial sub-samples, I find no evidence that either the Head of the Executive or the Finance Minister's formal education in economics is (unconditionally) associated with fiscal consolidation policy. Nevertheless, the analysis reveals some political and institutional conditions under which economists-turned-Heads of Government are indeed more likely to implement fiscal consolidation. Governments led by economists are more likely to implement fiscal consolidation when the government is less fractionalized, when they are supported by a parliamentary majority, and when there are fewer institutional constraints on the executive.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102754"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145106345","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 : 2025-12-01Epub Date: 2024-02-27DOI: 10.1016/j.ejpoleco.2024.102510
Pedro Bação , Joshua Duarte , Melissa Pereira , Marta Simões
This paper studies the relationship between inequality and public social spending for an overall sample of 28 OECD countries spanning 1997 to 2017. We add to the literature by dissecting social expenditure according to nine programs and allowing for the existence of a non-linear relation in the context of a dynamic panel threshold model. The analysis reveals a positive contribution of old-age pensions to the Gini index of disposable income distribution, the most often used indicator of inequality, supporting the need to rethink old-age pension systems in this group of countries. The results for the other social expenditure components vary with the inequality measure used and country groups under analysis, highlighting the problems that may be associated with panel data even when a set of countries with many characteristics in common is used. Our results also stress the relevance of accommodating nonlinearities when explaining inequality, paving the way to a better understanding of its behaviour.
{"title":"Social expenditure composition and inequality: A dynamic panel threshold analysis for OECD countries","authors":"Pedro Bação , Joshua Duarte , Melissa Pereira , Marta Simões","doi":"10.1016/j.ejpoleco.2024.102510","DOIUrl":"10.1016/j.ejpoleco.2024.102510","url":null,"abstract":"<div><div>This paper studies the relationship between inequality and public social spending for an overall sample of 28 OECD countries spanning 1997 to 2017. We add to the literature by dissecting social expenditure according to nine programs and allowing for the existence of a non-linear relation in the context of a dynamic panel threshold model. The analysis reveals a positive contribution of old-age pensions to the Gini index of disposable income distribution, the most often used indicator of inequality, supporting the need to rethink old-age pension systems in this group of countries. The results for the other social expenditure components vary with the inequality measure used and country groups under analysis, highlighting the problems that may be associated with panel data even when a set of countries with many characteristics in common is used. Our results also stress the relevance of accommodating nonlinearities when explaining inequality, paving the way to a better understanding of its behaviour.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102510"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140004172","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 : 2025-12-01Epub Date: 2023-07-01DOI: 10.1016/j.ejpoleco.2023.102435
Giovanni Carnazza , Paolo Liberati , Agnese Sacchi
When using discretionary fiscal policies in the countries belonging to the European Union, any change affecting the current fiscal stance must run into the boundary designed by fiscal rules. This would imply that discretionary fiscal policies - being mainly driven by the need to comply with fiscal rules - might be scarcely affected by politics and the political characteristics of a country. We empirically test this hypothesis on a sample of 19 European countries observed over years 1995–2019. Using different econometric techniques and alternative specifications, we find a strong and robust fiscal pro-cyclicality. More importantly, the pro-cyclicality of the fiscal policy is not significantly affected neither by the behaviour of macroeconomic fundamentals nor by institutional and political variables. From a policy viewpoint, it seems that the mechanisms introduced to guarantee fiscal sustainability in the euro area can overcome all possible political influences on both the size and the sign of implementable fiscal policies. This would suggest that politics does not matter to shape the public budget, at least not so much as the fiscal rules.
{"title":"Does politics matter? A comparative assessment of discretionary fiscal policies in the euro area","authors":"Giovanni Carnazza , Paolo Liberati , Agnese Sacchi","doi":"10.1016/j.ejpoleco.2023.102435","DOIUrl":"10.1016/j.ejpoleco.2023.102435","url":null,"abstract":"<div><div>When using discretionary fiscal policies in the countries belonging to the European Union, any change affecting the current fiscal stance must run into the boundary designed by fiscal rules. This would imply that discretionary fiscal policies - being mainly driven by the need to comply with fiscal rules - might be scarcely affected by politics and the political characteristics of a country. We empirically test this hypothesis on a sample of 19 European countries observed over years 1995–2019. Using different econometric techniques and alternative specifications, we find a strong and robust fiscal pro-cyclicality. More importantly, the pro-cyclicality of the fiscal policy is not significantly affected neither by the behaviour of macroeconomic fundamentals nor by institutional and political variables. From a policy viewpoint, it seems that the mechanisms introduced to guarantee fiscal sustainability in the euro area can overcome all possible political influences on both the size and the sign of implementable fiscal policies. This would suggest that politics does not matter to shape the public budget, at least not so much as the fiscal rules.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102435"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43935340","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 : 2025-12-01Epub Date: 2023-08-23DOI: 10.1016/j.ejpoleco.2023.102458
Benjamin Owusu, Bettina Bökemeier, Alfred Greiner
This paper empirically studies non-linearities in debt sustainability analysis by resorting to the modern estimation technique of panel smooth transition regression (PSTR). We assess euro area debt sustainability by analysing the reaction of the primary balance to changes in public debt, relative to GDP respectively, in annual frequency from 2000–2019 in a panel framework. The PSTR allows to estimate the existence of a threshold in the behaviour of the reaction function, refrains from the country-wise perspective and applies a regime-switching model to detect non-linearities. Data is segregated into different regimes endogenously via a logistic regression. Our results show that there are two different regimes in the euro area: a high and a low debt regime. The estimated reaction coefficient for the low debt regime is statistically insignificant, whereas it is positive and statistically significant for the high debt regime. Further, for a sub-sample of highly indebted economies we find a statistically significant negative (positive) reaction coefficient for the low (high) debt regime.
{"title":"Regime-based debt sustainability analysis: Evidence from euro area economies","authors":"Benjamin Owusu, Bettina Bökemeier, Alfred Greiner","doi":"10.1016/j.ejpoleco.2023.102458","DOIUrl":"10.1016/j.ejpoleco.2023.102458","url":null,"abstract":"<div><div>This paper empirically studies non-linearities in debt sustainability analysis by resorting to the modern estimation technique of panel smooth transition regression (PSTR). We assess euro area debt sustainability by analysing the reaction of the primary balance to changes in public debt, relative to GDP respectively, in annual frequency from 2000–2019 in a panel framework. The PSTR allows to estimate the existence of a threshold in the behaviour of the reaction function, refrains from the country-wise perspective and applies a regime-switching model to detect non-linearities. Data is segregated into different regimes endogenously via a logistic regression. Our results show that there are two different regimes in the euro area: a high and a low debt regime. The estimated reaction coefficient for the low debt regime is statistically insignificant, whereas it is positive and statistically significant for the high debt regime. Further, for a sub-sample of highly indebted economies we find a statistically significant negative (positive) reaction coefficient for the low (high) debt regime.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102458"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49245524","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 : 2025-12-01Epub Date: 2025-09-28DOI: 10.1016/j.ejpoleco.2025.102765
Clàudia Serra-Sala , Pilar Sorribas-Navarro
In highly segmented labor markets uneven distributions of risk across worker groups can lead to varying demands for redistribution. We study the impact of economic insecurity, associated with temporary contracts, on individual preferences for income redistribution. The Spanish labor market, where one-third of workers are employed under temporary contracts, provides a good context for this study. We use data from the European Social Survey from 2002 to 2018 and apply an exact matching methodology to isolate the effect of the contract type from other individual characteristics. Our results reveal that temporary contracts lead to an 11 percent increase in the likelihood of strongly supporting redistribution, irrespective of individuals’ education level or sex. In terms of age, the effect is concentrated among individuals aged 40 and above, indicating an increase in risk perception when this contractual figure is perceived as a dead end. During periods of macroeconomic uncertainty, when insecurity extends beyond the contract type, redistribution preferences of workers with temporary and permanent contracts equalize due to a substantial increase in the preferences of those with an ex-ante more secure labor market position. Our results provide evidence that economic insecurity caused by the design of labor market institutions is a strong determinant of redistribution preferences.
{"title":"Labor market institutions and preferences for redistribution","authors":"Clàudia Serra-Sala , Pilar Sorribas-Navarro","doi":"10.1016/j.ejpoleco.2025.102765","DOIUrl":"10.1016/j.ejpoleco.2025.102765","url":null,"abstract":"<div><div>In highly segmented labor markets uneven distributions of risk across worker groups can lead to varying demands for redistribution. We study the impact of economic insecurity, associated with temporary contracts, on individual preferences for income redistribution. The Spanish labor market, where one-third of workers are employed under temporary contracts, provides a good context for this study. We use data from the European Social Survey from 2002 to 2018 and apply an exact matching methodology to isolate the effect of the contract type from other individual characteristics. Our results reveal that temporary contracts lead to an 11 percent increase in the likelihood of strongly supporting redistribution, irrespective of individuals’ education level or sex. In terms of age, the effect is concentrated among individuals aged 40 and above, indicating an increase in risk perception when this contractual figure is perceived as a dead end. During periods of macroeconomic uncertainty, when insecurity extends beyond the contract type, redistribution preferences of workers with temporary and permanent contracts equalize due to a substantial increase in the preferences of those with an ex-ante more secure labor market position. Our results provide evidence that economic insecurity caused by the design of labor market institutions is a strong determinant of redistribution preferences.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102765"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145519678","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 : 2025-12-01Epub Date: 2023-04-02DOI: 10.1016/j.ejpoleco.2023.102384
Olegs Matvejevs, Olegs Tkacevs
This study uses panel econometric methods to explore the relationship between public and private investment in a sample of 34 industrialized economies of the OECD over the period between 1995 and 2019. It aims to establish whether public investment crowds in private investment, to what extent, and in which public policy areas the effect is stronger. The estimation results demonstrate that in the medium to long-term, extra public investment crowds in private investment as the latter adjusts to bring the stock of private capital closer to its long-term cointegrating relationship with public capital. The long-run public investment multiplier is around 2, which means that each additional dollar of public investment eventually attracts approximately two dollars of private investment. Public investment in economic affairs and infrastructure needed to improve human capital is the most effective in attracting private investment.
{"title":"Invest one – get two extra: Public investment crowds in private investment","authors":"Olegs Matvejevs, Olegs Tkacevs","doi":"10.1016/j.ejpoleco.2023.102384","DOIUrl":"10.1016/j.ejpoleco.2023.102384","url":null,"abstract":"<div><div><span><span>This study uses panel econometric methods to explore the relationship between public and private investment in a sample of 34 industrialized economies of the </span>OECD over the period between 1995 and 2019. It aims to establish whether public investment crowds in private investment, to what extent, and in which public policy areas the effect is stronger. The estimation results demonstrate that in the medium to long-term, extra public investment crowds in private investment as the latter adjusts to bring the stock of private capital closer to its long-term cointegrating relationship with public capital. The long-run public investment multiplier is around 2, which means that each additional dollar of public investment eventually attracts approximately two dollars of private investment. Public investment in economic affairs and infrastructure needed to improve </span>human capital is the most effective in attracting private investment.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102384"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42817015","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 : 2025-12-01Epub Date: 2025-10-13DOI: 10.1016/j.ejpoleco.2025.102769
Daniel Mele , Alessandro Pietropaoli
What is the causal impact of local employment dynamics on electoral behaviour? We combine Italian labour market area-level data for four national elections (2008, 2013, 2018 and 2022) with a shift-share IV estimation design to identify how local labour market conditions, captured by changes in the employment rate, affect voter participation and incumbent support. Our baseline estimates show that a 1 p.p. drop in the employment rate yields a significant 0.76 p.p. increase in turnout and a 0.80 p.p. decline in incumbent vote share. Further analyses reveal crucial nuances. First, exploring mediation, we find that higher turnout in response to worsening labour market conditions accounts for roughly one-quarter of the total negative impact on incumbent support via a participation channel. Second, the effects appear driven entirely by adverse conditions: we find strong electoral reactions in areas actually experiencing employment declines, but no significant response where conditions improve, consistent with a protest voting framework. Third, while regional-national partisan alignment slightly moderates effect magnitudes, national accountability for economic performance largely dominates the local electoral reaction.
{"title":"Local labour market conditions and electoral behaviour: An instrumental variable approach from Italy","authors":"Daniel Mele , Alessandro Pietropaoli","doi":"10.1016/j.ejpoleco.2025.102769","DOIUrl":"10.1016/j.ejpoleco.2025.102769","url":null,"abstract":"<div><div>What is the causal impact of local employment dynamics on electoral behaviour? We combine Italian labour market area-level data for four national elections (2008, 2013, 2018 and 2022) with a shift-share IV estimation design to identify how local labour market conditions, captured by changes in the employment rate, affect voter participation and incumbent support. Our baseline estimates show that a 1 p.p. drop in the employment rate yields a significant 0.76 p.p. increase in turnout and a 0.80 p.p. decline in incumbent vote share. Further analyses reveal crucial nuances. First, exploring mediation, we find that higher turnout in response to worsening labour market conditions accounts for roughly one-quarter of the total negative impact on incumbent support via a participation channel. Second, the effects appear driven entirely by adverse conditions: we find strong electoral reactions in areas actually experiencing employment declines, but no significant response where conditions improve, consistent with a protest voting framework. Third, while regional-national partisan alignment slightly moderates effect magnitudes, national accountability for economic performance largely dominates the local electoral reaction.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"90 ","pages":"Article 102769"},"PeriodicalIF":2.4,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145466065","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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