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The Economic Effects of Electoral Rules: Evidence from Unemployment Benefits

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  • Galasso, Vincenzo
  • Nunnari, Salvatore
Abstract
This paper provides a novel test of the link from electoral rules to economic policies. We focus on unemployment benefits because their classification as a broad or targeted transfer may vary — over time and across countries — according to the geographical dispersion of unemployed citizens, the main beneficiaries of the program. A simple theoretical model delivers unambiguous predictions on the interaction between electoral institutions and the unemployment rate in contestable and safe districts. Due to electoral incentives, the difference in the unemployment generosity between majoritarian and proportional systems depends on the difference in the unemployment rate between contestable and safe districts. We test this prediction using a novel dataset with information on electoral competitiveness and unemployment rates at district level, and different measures of unemployment benefit generosity for 16 OECD countries between 1980 and 2011. The empirical analysis strongly supports the theoretical predictions.

Suggested Citation

  • Galasso, Vincenzo & Nunnari, Salvatore, 2019. "The Economic Effects of Electoral Rules: Evidence from Unemployment Benefits," Quarterly Journal of Political Science, now publishers, vol. 14(3), pages 259-291, July.
    • Handle: RePEc:now:jlqjps:100.00018104
    DOI: 10.1561/100.00018104
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    Cited by:

    1. Matteo Gamalerio & Massimo Morelli & Margherita Negri, 2021. "The Political Economy of Open Borders: Theory and Evidence on the role of Electoral Rules," BAFFI CAREFIN Working Papers 21157, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    2. Garance Genicot & Laurent Bouton & Micael Castanheira, 2021. "Electoral Systems and Inequalities in Government Interventions [“Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures.”]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3154-3206.
    3. Matteo Gamalerio & Massimo Morelli & Margherita Negri, 2021. "The Political Economy of Open Borders: Theory and Evidence on the role of Electoral Rules," BAFFI CAREFIN Working Papers 21157, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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    More about this item

    Keywords

    Electoral rules; unemployment benefits; swing districts;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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