DP14619 Divided They Fall. Fragmented Parliaments and Government Stability

Author(s): Felipe Carozzi, Davide Cipullo, Luca Repetto
Publication Date: April 2020
Keyword(s): Alignment effect, Bargaining, fragmentation, Government stability, No-confidence votes
JEL(s): H1, H7, R50
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14619

This paper studies how political fragmentation affects government stability. We show that each additional party with representation in Parliament increases the probability that the incumbent government is unseated by 4 percentage points. Governments with more resources at their disposal for bargaining are less likely to be replaced. When they are, new government leaders are younger and better educated, suggesting instability may induce positive selection. We interpret our results in light of a bargaining model of coalition formation featuring government instability. Our findings indicate that the rising fragmentation in parliaments worldwide may have a substantial impact on stability and political selection.