Citation

Discussion Paper Details

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Title: The Economic Effects of Electoral Rules: Evidence from Unemployment Benefits

Author(s): Vincenzo Galasso and Salvatore Nunnari

Publication Date: July 2018

Keyword(s): Electoral Rules, Swing Districts and Unemployment Benefits

Programme Area(s): Labour Economics and Public Economics

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: electoral incentives induce more generous unemployment benefits in majoritarian than in proportional systems if and only if the unemployment rate is higher in contestable than in 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.

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Bibliographic Reference

Galasso, V and Nunnari, S. 2018. 'The Economic Effects of Electoral Rules: Evidence from Unemployment Benefits'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13081