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Public Choice

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20.05.2019

Ideology or voters? A quasi-experimental test of why left-wing governments spend more

verfasst von: Benoît Le Maux, Kristýna Dostálová, Fabio Padovano

Erschienen in: Public Choice | Ausgabe 1-2/2020

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Abstract

This paper analyzes and compares the explanatory powers of the two main theories describing the processes that lead left-wing governments to spend more than right-wing ones: (1) a demand-driven process whereby voters demand more expenditures and thus vote for the left; (2) a supply-driven process whereby governments in office follow their preferences/ideologies at the cost of deviating from constituents’ demands (party preference hypothesis). We provide a model that identifies the predictions associated with those hypotheses and show that they generate a problem of observational equivalence in empirical analysis. We solve the problem by applying two identification strategies, Regression Discontinuity Design and Propensity Score Matching. Using data from the French local public sector, our estimates provide mixed evidence of supply-side effects. Left-wing governments facing socioeconomic situations analogous to right-wing ones seem not to spend more on social services, but they do appear to spend more on other types of expenditure programs.

Vorheriger Artikel Better the devil you know? Reelected politicians and policy outcomes under no term limits

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The same view recently has found support in, among others, the US states (Besley and Case 2003; Caughey et al. 2017; Hill and Jones 2017; Holbein and Dynes 2018; Pickering and Rockey 2013), US cities (Gerber and Hopkins 2011), Canadian provinces (Bjørnskov and Potrafke 2012), Spain (Solé-Ollé 2003), Norway (Borge and Rattsø 2004), France (Foucault et al. 2008; Le Maux et al. 2011), Italy (Padovano and Petrarca 2014; Santolini 2008), Swedish local governments (Folke 2014; Pettersson-Lidbom 2008), German municipalities (Freier and Odendahl 2015), as well as in OECD countries (Pickering and Rockey 2011).

The prediction is backed somewhat by empirical evidence, since median income or, equivalently, average income, frequently has been used as an independent variable for explaining governments’ behavior in local democracies (see, e.g., Ahmed and Greene 2000; Aronsson et al. 2000; Guengant et al. 2002) and central governments (Arpaia and Turrini 2008; Kolluri et al. 2000; Pradhan and Bagchi 2012; Wahab 2004). Likewise, the Meltzer-and-Richard hypothesis recently has found statistical support in Alesina et al. (2000), Borge and Rattsø (2004), Mattos and Rocha (2008), Milanovic (2000) and Mohl and Pamp (2009).

For instance, in the case of French local public expenditures, Foucault et al. (2008) and Le Maux et al. (2011) control for the partisan affiliation of the coalition government according to the classical binary index (left-wing or right-wing majority), but do not consider the index as endogenous.

Voters elect departmental councilors directly for 6-year terms on a two-ballot, uninominal majority voting procedure. An important feature of the system is that only one half of the councilors are renewed at each election, with one councilor per constituency. A constituency is a grouping of municipalities referred to as a canton—a subset of the Department. In a given constituency, a candidate who secures at least 25% of the registered voters and more than 50% of the total number of votes is elected. If no political candidate satisfies those conditions, a second electoral round is held 1 week later. The two candidates who obtain the largest number of votes in the first round proceed to the second round, plus any other candidate who received at least 10% of the votes in the constituency. In the second round, the candidate receiving the most votes is elected.

The variable unemp does not correspond to a measure of the rate of unemployment, but instead to the share of the unemployed people in the population who benefit from the departmental program.

Following the literature on local public good provision, we assume that the quantity of public good provided can be approximated by a Cobb-Douglas function (see, e.g.,Guengant et al. 2002). The specification thereby becomes linear when log-transforming the variables.

Note that a few studies attempt to estimate the slight, extra amount of incumbency advantage that a party enjoys from being in the majority rather than the minority (see, e.g., Feigenbaum et al. 2017. To do so, they exploit information about previous elections in order to control for all factors that could produce the incumbency advantage (e.g., the underlying partisanship of voters). The focus is on marginal electoral success, but not on public spending per se. Our research question is different. We aim to account for all demand factors in year t that could affect the vote on the budget at t. Should we be using information from previous elections (e.g., from year \(t-k\)), we would actually fail to capture what we aim to control for.

For each election year, the McCrary density test yields the following p value: 0.142 in 1998, 0.770 in 2001, 0.861 in 2004, and 0.559 in 2008.

Note that the random effects model, with the greatest log-likelihood, performs very poorly in terms of resolving the selection bias, as it mostly yields standardized biases of over 25 to more than 100; for that reason it has been excluded. A pooled model with geographical dummies is a good proxy for the correct specification of individual fixed effects, which are impossible to estimate owing to insufficient inter-departmental variation in our case.

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Titel: Ideology or voters? A quasi-experimental test of why left-wing governments spend more
verfasst von: Benoît Le Maux
Kristýna Dostálová
Fabio Padovano
Publikationsdatum: 20.05.2019
Verlag: Springer US
Erschienen in: Public Choice / Ausgabe 1-2/2020
Print ISSN: 0048-5829
Elektronische ISSN: 1573-7101
DOI: https://doi.org/10.1007/s11127-019-00666-8

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