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Alberto F. Alesina's
Scholarly Papers
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16,336 |
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3,854 |
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Alberto F. Alesina Harvard University - Department of Economics Edward L. Glaeser Harvard University - John F. Kennedy School of Government, Department of Economics Bruce Sacerdote Dartmouth College - Department of Economics
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08 Nov 01
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26 Nov 03
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1,011 (4,845)
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Abstract:
European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre-tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor.
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Alberto F. Alesina Harvard University - Department of Economics Edward L. Glaeser Harvard University - John F. Kennedy School of Government, Department of Economics Bruce Sacerdote Dartmouth College - Department of Economics
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19 Apr 05
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17 Aug 05
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955 (5,330)
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Americans average 25.1 working hours per person in working age per week, but the Germans average 18.6 hours. The average American works 46.2 weeks per year, while the French average 40 weeks per year. Why do western Europeans work so much less than Americans? Recent work argues that these differences result from higher European tax rates, but the vast empirical labor supply literature suggests that tax rates can explain only a small amount of the differences in hours between the U.S. and Europe. Another popular view is that these differences are explained by long-standing European "culture", but Europeans worked more than Americans as late as the 1960s. In this paper, we argue that European labor market regulations, advocated by unions in declining European industries who argued "work less, work all" explain the bulk of the difference between the U.S. and Europe. These policies do not seem to have increased employment, but they may have had a more society-wide influence on leisure patterns because of a social multiplier where the returns to leisure increase as more people are taking longer vacations.
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3.
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Bureaucrats or Politicians?
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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05 Aug 03
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05 Sep 09
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609 ( 10,763) |
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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27 Feb 04
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18 Mar 08
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Policies are typically chosen by politicians and bureaucrats. This Paper investigates the criteria that should lead a society to allocate policy tasks to elected policymakers (politicians) or non-elected bureaucrats. Politicians are preferable for tasks that do not involve too much specific technical ability relative to effort; there is uncertainty about ex-post preferences of the public and flexibility is valuable; time inconsistency is not an issue; small but powerful vested interests do not have large stakes in the policy outcome; effective decisions over policies require taking into account policy complementarities and compensating the losers. We then compare this normative benchmark with the case in which politicians choose when to delegate and we show that the two generally differ.
Politics, delegation, bureaucracies
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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30 Jan 04
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05 Sep 09
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Policies are typically chosen by politicians and bureaucrats. This paper investigates the e fficiency criteria for allocating policy tasks to elected policymakers (politicians) or non elected bureaucrats. Politicians are more efficient for tasks that do not involve too much specific technical ability relative to effort; there is uncertainty about ex post preferences of the public and flexibility is valuable; time inconsistency is not an issue; small but powerful vested interests do not have large stakes in the policy outcome; effective decisions over policies require taking into account policy complementarities and compensating the losers. We then compare this benchmark with the case in which politicians choose when to delegate and we show that the two generally differ.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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05 Aug 03
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18 Mar 08
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559
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Abstract:
Policies are typically chosen by politicians and bureaucrats. This paper investigates the criteria that should lead a society to allocate policy tasks to elected policymakers (politicians) or non elected bureaucrats. Politicians are preferable for tasks that do not involve too much specific technical ability relative to effort; there is uncertainty about ex post preferences of the public and flexibility is valuable; time inconsistency is not an issue; small but powerful vested interests do not have large stakes in the policy outcome; effective decisions over policies require taking into account policy complementarities and compensating the losers. We then compare this normative benchmark with the case in which politicians choose when to delegate and we show that the two generally differ.
politics, delegation, bureaucracies
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4.
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Optimal Currency Areas
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Alberto F. Alesina Harvard University - Department of Economics Robert J. Barro Harvard University - Department of Economics Silvana Tenreyro London School of Economics (LSE)
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19 Jul 02
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26 Nov 03
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608 ( 10,804) |
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Alberto F. Alesina Harvard University - Department of Economics Robert J. Barro Harvard University - Department of Economics Silvana Tenreyro London School of Economics (LSE)
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19 Jul 02
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26 Nov 03
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535
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As the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements.
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Alberto F. Alesina Harvard University - Department of Economics Robert J. Barro Harvard University - Department of Economics Silvana Tenreyro London School of Economics (LSE)
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20 Jul 02
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25 Jul 02
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As the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements.
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5.
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Inequality and Happiness: Are Europeans and Americans Different?
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Alberto F. Alesina Harvard University - Department of Economics Rafael Di Tella Harvard Business School - Business, Government and the International Economy Unit Robert MacCulloch Imperial College London - Tanaka Business School
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31 Mar 01
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26 Nov 03
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581 ( 11,506) |
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Alberto F. Alesina Harvard University - Department of Economics Rafael Di Tella Harvard Business School - Business, Government and the International Economy Unit Robert MacCulloch Imperial College London - Tanaka Business School
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14 Dec 01
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26 Nov 03
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We study the effect of the level of inequality in society on individual well being using a total of 123,668 answers to a survey question about ?happiness?. We find that individuals have a lower tendency to report themselves happy when inequality is high, even after controlling for individual income, a large set of personal characteristics, and year and country (or, in the case of the US, state) dummies. The effect, however, appears to be stronger in Europe than in the US. In addition we find a striking difference across groups. In Europe, the poor and those on the left of the political spectrum are unhappy about inequality; whereas in the US the happiness of the poor and of those on the left is uncorrelated with inequality. Interestingly, in the US it is the rich who are especially bothered by inequality. We argue that these findings are consistent with the perception (not necessarily the reality) that Americans have of living in a mobile society, where individual effort can move people up and down the income ladder, while Europeans believe that they live in less mobile societies.
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Alberto F. Alesina Harvard University - Department of Economics Rafael Di Tella Harvard Business School - Business, Government and the International Economy Unit Robert MacCulloch Imperial College London - Tanaka Business School
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31 Jul 01
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21 Aug 01
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The answer to the question posed in the title is "yes." Using a total of 128,106 answers to a survey question about "happiness," we find that there is a large, negative and significant effect of inequality on happiness in Europe but not in the US. There are two potential explanations. First, Europeans prefer more equal societies (inequality belongs in the utility function for Europeans but not for Americans). Second, social mobility is (or is perceived to be) higher in the US so being poor is not seen as affecting future income. We test these hypotheses by partitioning the sample across income and ideological lines. There is evidence of "inequality generated" unhappiness in the US only for a sub-group of rich leftists. In Europe inequality makes the poor unhappy, as well as the leftists. This favors the hypothesis that inequality affects European happiness because of their lower social mobility (since no preference for equality exists amongst the rich or the right). The results help explain the greater popular demand for government to fight inequality in Europe relative to the US.
Inequality, happiness, redistribution
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Alberto F. Alesina Harvard University - Department of Economics Rafael Di Tella Harvard Business School - Business, Government and the International Economy Unit Robert MacCulloch Imperial College London - Tanaka Business School
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31 Mar 01
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22 Apr 01
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Abstract:
The answer to the question posed in the title is "yes". Using a total of 128,106 answers to a survey question about happiness, we find that there is a large, negative and significant effect of inequality on happiness in Europe but not in the US. There are two potential explanations. First, Europeans prefer more equal societies (inequality belongs in the utility function for Europeans but not for Americans). Second, social mobility is (or is perceived to be) higher in the US so being poor is not seen as affecting future income. We test these hypotheses by partitioning the sample across income and ideological lines. There is evidence of inequality generated unhappiness in the US only for a sub-group of rich leftists. In Europe inequality makes the poor unhappy, as well as the leftists. This favors the hypothesis that inequality affects European happiness because of their lower social mobility (since no preference for equality exists amongst the rich or the right). The results help explain the greater popular demand for government to fight inequality in Europe relative to the US.
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Alberto F. Alesina Harvard University - Department of Economics George-Marios Angeletos Massachusetts Institute of Technology (MIT) - Department of Economics
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05 Nov 02
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18 Feb 03
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571 (11,821)
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Different beliefs about how fair social competition is and what determines income inequality, influence the redistributive policy chosen democratically in a society. But the composition of income in the first place depends on equilibrium tax policies. If a society believes that individual effort determines income, and that all have a right to enjoy the fruits of their effort, it will choose low redistribution and low taxes. In equilibrium, effort will be high, the role of luck limited, market outcomes will be quite fair, and social beliefs will be self-fulfilled. If instead a society believes that luck, birth, connections and/or corruption determine wealth, it will tax a lot, thus distorting allocations and making these beliefs self-sustained as well. We show how this interaction between social beliefs and welfare policies may lead to multiple equilibria or multiple steady states. We argue that this model can contribute to explain US vis-a-vis continental European perceptions about income inequality and choices of redistributive policies.
Inequality, Redistribution, Fairness, Political Economy, Median Vote
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The European Union: A Politically Incorrect View
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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16 Mar 04
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17 Aug 09
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553 ( 12,394) |
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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18 May 04
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17 Aug 09
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387
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In this paper, we present our view of the recent evolution of European integration. We first briefly describe the main features of the institution and decision making process in the European Union, with particular attention to the debate between federalists and super nationalists. We then identify two key issues in the process of European integration: 1) an emphasis on "institutional balance" based on a complex web of institutions with overlapping jurisdiction; 2) A conflict between a dirigiste versus a more laissez faire approach to government. We argue that the first problem leads to a lack of clarity in the allocation of powers between European institutions, confusion in the allocation of prerogatives between national governments and EU institutions, and lack of transparency and accountability. The dirigiste culture also manifests itself in an abundant production of verbose rhetoric, which in our view is far from innocuous and direct set the European policy debate in the wrong direction. We then study how these problems play out in 4 important areas: employment policies, culture and scientific research, foreign and defense policies, and fiscal policy. Finally, we study the implications of the recently proposed European Constitution a potential solution of these two problems.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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16 Mar 04
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16 Mar 04
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166
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In this paper, we present our view of the recent evolution of European integration. We first briefly describe the main features of the institution and decision making process in the European Union, with particular attention to the debate between federalists and super nationalists. We then identify two key issues in the process of European integration: 1) an emphasis on 'institutional balance' based on a complex web of institutions with overlapping jurisdiction; 2) A conflict between a dirigiste versus a more laissez faire approach to government. We argue that the first problem leads to a lack of clarity in the allocation of powers between European institutions, confusion in the allocation of prerogatives between national governments and EU institutions, and lack of transparency and accountability. This dirigiste culture produces verbose rhetoric, which moves the European policy debate in the wrong direction. We then study how these problems play out in four important areas: employment policies, culture and scientific research, foreign and defense policies, and fiscal policy. Finally, we study the implications of the recently proposed European Constitution as a potential solution of these two problems.
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Ethnic Diversity and Economic Performance
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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10 Mar 04
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03 Jun 05
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546 ( 12,613) |
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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30 Jul 04
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03 Jun 05
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455
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We survey and assess the literature on the positive and negative effects of ethnic diversity on economic policies and outcomes. Our focus is on countries, on cities in developed countries (the U.S.) and on villages in developing countries. We also consider the endogenous formation of political jurisdictions and we highlight several open issues in need of further research.
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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10 Mar 04
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10 Mar 04
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We survey and assess the literature on the positive and negative effects of ethnic diversity on economic policies and outcomes. Our focus is on both focus both cities in developed countries (the US) and villages in developing countries. We also consider the endogenous formation of political jurisdictions and we highlight several open issues in need of further research.
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International Unions
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Federico Etro Harvard University - Department of Economics
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23 Apr 03
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22 Jul 03
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531 ( 13,102) |
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Federico Etro Harvard University - Department of Economics
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22 Jul 03
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22 Jul 03
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We model an international union as a group of countries deciding together on the provision of public goods or policies that generate spillovers across members. The trade-off between benefits of coordination and loss of independent policy-making endogenously determines size, composition and scope of the union. Policy uniformity reduces the union's size, may block enlargement processes and induce excessive centralization. We study flexible rules with non-uniform policies that reduce these inefficiencies focusing on arrangements relevant in the context of existing unions or federal states, like enhanced cooperation, subsidiarity, federal mandates and earmarked grants.
Federalism, political economy, European Union, international unions
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Federico Etro Harvard University - Department of Economics
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23 Apr 03
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22 Jul 03
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We model an international union as a group of countries deciding together on the provision of public goods or policies that generate spillovers across members. The trade-off between benefits of coordination and loss of independent policymaking endogenously determines size, composition and scope of the union. Policy uniformity reduces the union's size, may block enlargement processes and induce excessive centralization. We study flexible rules with non-uniform policies that reduce these inefficiencies focusing on arrangements relevant in the context of existing unions or federal states, like enhanced cooperation, subsidiarity, federal mandates and earmarked grants.
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Romain T. Wacziarg Stanford Graduate School of Business Enrico Spolaore Tufts University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics
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22 Jan 03
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25 Mar 03
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531 (13,102)
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Normally, economists take the size of countries as an exogenous variable which does need to be explained. Nevertheless, the borders of countries and therefore their size change, partially in response to economic factors such as the pattern of international trade. Conversely, the size of countries influences their economic performance and their preferences for international economic policies - for instance smaller countries have a greater stake in maintaining free trade. In this paper we review the theory and the evidence concerning a growing body of research that has considered both the impact of market size on growth and the endogenous determination of country size. We show that our understanding of economic performance and of the history of international economic integration can be greatly improved by bringing the issue of country size at the forefront of the analysis of growth.
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Alberto F. Alesina Harvard University - Department of Economics
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23 Oct 02
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23 Jul 03
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530 (13,145)
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Borders are a man made institution, and as such their shape cannot be taken as part of the physical landscape. The size of countries is endogenous to politico economic forces. This paper discusses recent efforts by economists to study three related questions: What determines the evolution of the size of countries? Does size matter for economic success? Given the trend toward decentralization and of creation of supernational unions like the EU, is the meaning of national borders evolving?
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Fractionalization
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Arnaud Devleeschauwer affiliation not provided to SSRN Sergio Kurlat World Bank Romain T. Wacziarg Stanford Graduate School of Business
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20 Jul 02
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26 Nov 03
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507 ( 14,018) |
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Arnaud Devleeschauwer affiliation not provided to SSRN Sergio Kurlat World Bank Romain T. Wacziarg Stanford Graduate School of Business
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03 Jan 03
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04 Jan 03
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We provide new measures of ethnic, linguistic and religious fractionalization for about 190 countries. These measures are more comprehensive than those previously used in the economics literature and we compare our new variables with those previously used. We also revisit the question of the effects of ethnic, linguistic and religious fractionalization on quality of institutions and growth. We partly confirm and partly modify previous results. The patterns of cross-correlations between potential explanatory variables and their different degree of endogeneity makes it hard to make unqualified statements about competing explanations for economic growth and the quality of government.
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Arnaud Devleeschauwer affiliation not provided to SSRN Sergio Kurlat World Bank Romain T. Wacziarg Stanford Graduate School of Business
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20 Jul 02
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26 Nov 03
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Abstract:
We provide new measures of ethnic, linguistic and religious fractionalization for about 190 countries. These measures are more comprehensive than those previously used in the economics literature and we compare our new variables with those previously used. We also revisit the question of the effects of ethnic, linguistic and religious fractionalization on quality of institutions and growth. We partly confirm and partly modify previous results. The patterns of cross-correlations between potential explanatory variables and their different degree of endogeneity makes it hard to make unqualified statements about competing explanations for economic growth and the quality of government.
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13.
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Corruption, Inequality and Fairness
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Alberto F. Alesina Harvard University - Department of Economics George-Marios Angeletos Massachusetts Institute of Technology (MIT) - Department of Economics
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08 May 05
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06 Aug 05
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479 ( 15,150) |
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Alberto F. Alesina Harvard University - Department of Economics George-Marios Angeletos Massachusetts Institute of Technology (MIT) - Department of Economics
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06 Jul 05
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06 Jul 05
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Bigger governments raise the possibilities for corruption; more corruption may in turn raise the support for redistributive policies that intend to correct the inequality and injustice generated by corruption. We formalize these insights in a simple dynamic model. A positive feedback from past to current levels of taxation and corruption arises either when wealth originating in corruption and rent seeking is considered unfair, or when the ability to engage in corruption is unevenly distributed in the population. This feedback introduces persistence in the size of the government and the levels of corruption and inequality. Multiple steady states exist in some cases.
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Alberto F. Alesina Harvard University - Department of Economics George-Marios Angeletos Massachusetts Institute of Technology (MIT) - Department of Economics
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08 May 05
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06 Aug 05
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457
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Bigger governments raise the possibilities for corruption; more corruption may in turn raise the support for redistributive policies that intend to correct the inequality and injustice generated by corruption. We formalize these insights in a simple dynamic model. A positive feedback from past to current levels of taxation and corruption arises either when wealth originating in corruption and rent seeking is considered unfair, or when the ability to engage in corruption is unevenly distributed in the population. This feedback introduces persistence in the size of the government and the levels of corruption and inequality. Multiple steady states exist in some cases.
Corruption, rent seeking, inequality, fairness, redistribution, political economy
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The Political Economy of Budget Deficits
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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Posted:
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13 Jun 00
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Last Revised:
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12 Apr 08
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425 ( 17,793) |
75
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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15 Feb 06
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Last Revised:
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15 Feb 06
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374
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75
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Abstract:
This paper provides a critical survey of the literature on politico-institutional determinants of the government budget. We organize our discussion around two questions: Why did certain OECD countries, but not others, accumulate large public debts? Why did these fiscal imbalances appear in the last 20 years rather than before? We begin by discussing the "tax smoothing" model and conclude that this approach alone cannot provide complete answers to these questions. We will then proceed to a discussion of political economy models, which we organize in six groups: (i) models based upon opportunistic policymakers and naive voters with "fiscal illusion;" (ii) models of intergenerational redistributions; (iii) models of debt as a strategic variable, linking the current government with the next one; (iv) models of coalition governments; (v) models of geographically dispersed interests; and (vi) models emphasizing the effects of budgetary institutions. We conclude by briefly discussing policy implications.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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13 Jun 00
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Last Revised:
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12 Apr 08
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51
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75
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Abstract:
This paper provides a critical survey of the literature on politico-institutional determinants of the government budget. We organize our discussion around two questions: Why did certain OECD countries, but not others, accumulate large public debts? Why did these fiscal imbalances appear in the last twenty years rather than before? We begin by discussing the 'tax smoothing' model and conclude that this approach alone cannot provide complete answers to these questions. We will then proceed to a discussion of political economy models, which we organize in six groups: i) Models based upon opportunistic policy makers and naive voters with 'fiscal illusion'; ii) Models of intergenerational redistributions; iii) Models of debt as a strategic variable, linking the current government with the next one; iv) Models of coalition governments; v) Models of geographically dispersed interests; vi) Models emphasizing the effects of budgetary institutions.
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15.
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Endogenous Political Institutions
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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Posted:
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21 Jun 02
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Last Revised:
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06 Sep 04
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412 ( 18,552) |
49
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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06 Sep 04
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Last Revised:
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06 Sep 04
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0
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Abstract:
A fundamental aspect of institutional design is how much society chooses to delegate unchecked power to its leaders. If, once elected, a leader cannot be restrained, society runs the risk of a tyranny of the majority, if not the tyranny of a dictator. If a leader faces too many ex post checks and balances, legislative action is too often blocked. As our critical constitutional choice, we focus upon the size of the minority needed to block legislation, or conversely the size of the (super)majority needed to govern. We analyze both "optimal" constitutional design and "positive" aspects of this process. We derive several empirical implications which we then discuss.
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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04 Dec 02
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Last Revised:
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04 Dec 02
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19
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49
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Abstract:
A fundamental aspect of institutional design is how much society chooses to delegate unchecked power to its leaders. If, once elected, a leader cannot be restrained, society runs the risk of a tyranny of the majority, if not the tyranny of a dictator. If a leader faces too many ex post checks and balances, legislative action is too often blocked. As our critical constitutional choice we focus upon the size of the minority needed to block legislation, or conversely the size of the (super) majority needed to govern. We analyse both 'optimal' constitutional design and 'positive' aspects of this process. We derive several empirical implications, which we then discuss.
Political systems, endogenous constitutions, super-majority rule
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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| Posted: |
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22 Oct 02
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Last Revised:
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06 Sep 04
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366
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49
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Abstract:
Political institutions influence economic policy, but they are themselves endogenous since they are chosen, in some way, by members of the polity. An important aspect of institutional design is how much society chooses to delegate unchecked power to its leaders. If, once elected, a leader cannot be restrained, society runs the risk of a tyranny of the majority, if not the tyranny of a dictator. If a leader faces too many ex post checks and balances, legislative action is too often blocked. As our critical constitutional choice we focus upon the size of the minority needed to block legislation, or conversely the size of the (super)majority needed to govern. We analyze both "optimal" constitutional design and "positive" aspects of this process. We derive several empirical implications which we then discuss.
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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| Posted: |
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21 Jun 02
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Last Revised:
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04 Dec 02
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27
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49
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Abstract:
Political institutions influence economic policy, but they are themselves endogenous since they are chosen, in some way, by members of the polity. An important aspect of institutional design is how much society chooses to delegate unchecked power to its leaders. If, once elected, a leader cannot be restrained, society runs the risk of a tyranny of the majority, if not the tyranny of a dictator. If a leader faces too many ex post checks and balances, legislative action is too often blocked. As our critical constitutional choice we focus upon the size of the minority needed to block legislation, or conversely the size of the (super) majority needed to govern. We analyze both 'optimal' constitutional design and 'positive' aspects of this process. We derive several empirical implications which we then discuss.
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16.
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The Power of the Family
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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Posted:
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17 Apr 07
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Last Revised:
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04 Jun 08
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405 ( 18,955) |
28
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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27 Jun 07
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Last Revised:
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30 Jul 07
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43
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28
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Abstract:
The structure of family relationships influences economic behavior and attitudes. We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have for their parents for over 70 countries. We show that strong family ties imply more reliance on the family as an economic unit which provides goods and services and less on the market and on the government for social insurance. With strong family ties home production is higher, labor force participation of women and youngsters, and geographical mobility, lower. Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit. We present evidence on cross country regressions. To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties. Our results overall indicate a significant influence of the strength of family ties on economic outcomes.
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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17 Apr 07
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Last Revised:
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04 Jun 08
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362
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28
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Abstract:
The structure of family relationships influences economic behavior and attitudes. We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have for their parents for over 70 countries. We show that strong family ties imply more reliance on the family as an economic unit which provides goods and services and less on the market and on the government for social insurance. With strong family ties home production is higher, labor force participation of women and youngsters, and geographical mobility, lower. Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit. We present evidence on cross country regressions. To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties. Our results overall indicate a significant influence of the strength of family ties on economic outcomes.
family ties, culture, home production and market activities, immigrants
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17.
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Regulation and Investment
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Giuseppe Nicoletti Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) Fabio Schiantarelli Boston College - Department of Economics
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Posted:
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23 Jan 03
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Last Revised:
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30 May 03
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376 ( 20,827) |
49
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Giuseppe Nicoletti Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) Fabio Schiantarelli Boston College - Department of Economics
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| Posted: |
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28 May 03
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Last Revised:
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30 May 03
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29
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49
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Abstract:
One commonly held view about the difference between continental European countries and other OECD economies, especially the United States, is that the heavy regulation of Europe reduces its growth. Using newly assembled data on regulation in several sectors of many OECD countries, we provide substantial and robust evidence that various measures of regulation in the product market, concerning in particular entry barriers, are negatively related to investment. The policy implication of our analysis is clear: regulatory reforms, especially those that liberalize entry, are very likely to spur investment.
Regulation, investment
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Giuseppe Nicoletti Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) Fabio Schiantarelli Boston College - Department of Economics
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| Posted: |
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27 Mar 03
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Last Revised:
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28 May 03
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56
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49
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Abstract:
One commonly held view about the difference between continental European countries and other OECD economies, especially the United States, is that the heavy regulation of Europe reduces its growth. Using newly assembled data on regulation in several sectors of many OECD countries, we provide substantial and robust evidence that various measures of regulation in the product market, concerning in particular entry barriers, are negatively related to investment. The implications of our analysis are clear: regulatory reforms, especially those that liberalize entry, are very likely to spur investment.
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Giuseppe Nicoletti Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) Fabio Schiantarelli Boston College - Department of Economics
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| Posted: |
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23 Jan 03
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Last Revised:
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28 May 03
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291
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49
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Abstract:
One commonly held view about the difference between continental European countries and other OECD economies, especially the United States, is that the heavy regulation of the former reduces their growth. Using newly assembled data on regulation in several sectors of many OECD countries, we provide substantial and robust evidence that various measures of regulation in the product markets, concerning in particular entry barriers, are negatively related to investment. The policy implication of our analysis is clear: regulatory reforms that liberalize entry are very likely to spur investment.
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18.
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Artificial States
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Janina Matuszeski Harvard University - Faculty of Arts and Sciences
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Posted:
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22 Mar 06
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Last Revised:
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06 Aug 07
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373 ( 21,055) |
10
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Janina Matuszeski Harvard University - Faculty of Arts and Sciences
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| Posted: |
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14 Jul 06
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24 Aug 06
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44
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10
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Abstract:
Artificial states are those in which political borders do not coincide with a division of nationalities desired by the people on the ground. We propose and compute for all countries in the world two new measures how artificial states are. One is based on measuring how borders split ethnic groups into two separate adjacent countries. The other one measures how straight land borders are, under the assumption the straight land borders are more likely to be artificial. We then show that these two measures seem to be highly correlated with several measures of political and economic success.
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Janina Matuszeski Harvard University - Faculty of Arts and Sciences
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| Posted: |
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22 Mar 06
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Last Revised:
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06 Aug 07
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329
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10
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Abstract:
Artifical states are those in which political borders do not coincide with a division of nationalities desired by the people on the ground. We propose and compute for all countries in the world two new measures of the degree to which states are artificial. One is based on measuring how borders split ethnic groups into two separate adjacent countries. The other measures how straight land borders are, under the assumption the straight land borders are more likely to be artificial. We then show that these two measures seem to be highly correlated with several measures of political and economic success.
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19.
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Why is Fiscal Policy Often Procyclical?
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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Posted:
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09 Aug 05
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Last Revised:
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18 Mar 08
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344 ( 23,256) |
29
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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27 Oct 05
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Last Revised:
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18 Mar 08
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24
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29
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Abstract:
Many countries, especially developing ones, follow procyclical fiscal polices, namely spending goes up (taxes go down) in booms and spending goes down (taxes go up) in recessions. We provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for less-than-benevolent government to appropriate rents. Voters have incentives similar to the "starving the Leviathan" classic argument, and demand more public goods or fewer taxes to prevent governments from appropriating rents when the economy is doing well. We test this argument against more traditional explanations based purely on borrowing constraints, with a reasonable amount of success.
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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09 Aug 05
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Last Revised:
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17 Mar 08
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320
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29
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Abstract:
Many countries, especially developing ones, follow procyclical fiscal policies, namely spending goes up (taxes go down) in booms and spending goes down (taxes go up) in recessions. We provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for less-than-benevolent government to appropriate rents. Voters have incentives similar to the "starving the Leviathan" classic argument, and demand more public goods or fewer taxes to prevent governments from appropriating rents when the economy is doing well. We test this argument against more traditional explanations based purely on borrowing constraints, with a reasonable amount of success.
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20.
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Gender Based Taxation and the Division of Family Chores
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Alberto F. Alesina Harvard University - Department of Economics Andrea Ichino European University Institute - Economics Department (ECO) Loukas Karabarbounis Harvard University - Department of Economics
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Posted:
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28 Nov 07
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Last Revised:
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12 Aug 09
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237 ( 35,739) |
13
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Alberto F. Alesina Harvard University - Department of Economics Andrea Ichino European University Institute - Economics Department (ECO) Loukas Karabarbounis Harvard University - Department of Economics
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| Posted: |
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03 Dec 08
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Last Revised:
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09 Dec 08
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48
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13
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Abstract:
Gender Based Taxation (GBT) satisfies Ramsey's optimal criterion by taxing less the more elastic labor supply of women. This holds when different elasticities between men and women are taken as exogenous and primitive. We study GBT in a model in which, instead, elasticity differences emerge endogenously from the bargained allocation of family duties. We explore two polar cases, which summarize the channels through which GBT affects an economy encompassing a wider set of possible reasons for gender differences. In the first case, the allocation of family chores is uneven between spouses because men have a superior bargaining power. In the second, instead, women take up more chores because they have a comparative advantage in household activities. We show how GBT emerges as an optimal policy tool as result of the interaction between incentives within the family and the Ramsey criterion, which is internalized by the government but not by household members.
Optimal Taxation, Economics of Gender, Family Economics, Elasticity of Labor Supply
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Alberto F. Alesina Harvard University - Department of Economics Andrea Ichino European University Institute - Economics Department (ECO) Loukas Karabarbounis Harvard University - Department of Economics
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| Posted: |
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09 Jun 08
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Last Revised:
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09 Jun 08
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2
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13
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Abstract:
Gender Based Taxation (GBT) satisfies Ramsey's optimal criterion by taxing less the more elastic labour supply of (married) women. This holds when different elasticities between men and women are taken as exogenous and primitive. But in this paper we also explore differences in gender elasticities which emerge endogenously in a model in which spouses bargain over the allocation of home duties. GBT changes spouses' implicit bargaining power and induces a more balanced allocation of house work and working opportunities between males and females. Because of decreasing returns to specialization in home and market work, social welfare improves by taxing conditional on gender. When income sharing within the family is substantial, both spouses may gain from GBT.
economics of gender, elasticity of labour supply, family economics, optimal taxation
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Alberto F. Alesina Harvard University - Department of Economics Andrea Ichino European University Institute - Economics Department (ECO) Loukas Karabarbounis Harvard University - Department of Economics
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| Posted: |
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23 May 08
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Last Revised:
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23 May 08
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11
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13
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Abstract:
Gender Based Taxation (GBT) satisfies Ramsey's optimal criterion by taxing less the more elastic labor supply of (married) women. This holds when different elasticities between men and women are taken as exogenous and primitive. But in this paper we also explore differences in gender elasticities which emerge endogenously in a model in which spouses bargain over the allocation of home duties. GBT changes spouses' implicit bargaining power and induces a more balanced allocation of house work and working opportunities between males and females. Because of decreasing returns to specialization in home and market work, social welfare improves by taxing conditional on gender. When income sharing within the family is substantial, both spouses may gain from GBT.
optimal taxation, economics of gender, family economics, elasticity of labor supply
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Alberto F. Alesina Harvard University - Department of Economics Andrea Ichino European University Institute - Economics Department (ECO) Loukas Karabarbounis Harvard University - Department of Economics
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| Posted: |
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30 Nov 07
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Last Revised:
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31 Jan 08
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11
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13
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Abstract:
Gender Based Taxation (GBT) satisfies Ramsey's optimal criterion by taxing less the more elastic labor supply of women. This holds when different elasticities between men and women are taken as exogenous and primitive. We study GBT in a model in which, instead, elasticity differences emerge endogenously from the bargained allocation of family duties. We explore two polar cases, which summarize the channels through which GBT affects an economy encompassing a wider set of possible reasons for gender differences. In the first case, the allocation of family chores is uneven between spouses because men have a superior bargaining power. In the second, instead, women take up more chores because they have a comparative advantage in household activities. We show how GBT emerges as an optimal policy tool as result of the interaction between incentives within the family and the Ramsey criterion, which is internalized by the government but not by household members.
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Alberto F. Alesina Harvard University - Department of Economics Andrea Ichino European University Institute - Economics Department (ECO) Loukas Karabarbounis Harvard University - Department of Economics
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| Posted: |
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28 Nov 07
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Last Revised:
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12 Aug 09
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165
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13
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Abstract:
Gender Based Taxation (GBT) satisfies Ramsey's optimal criterion by taxing less the more elastic labor supply of (married) women. This holds when different elasticities between men and women are taken as exogenous and primitive. But in this paper we also explore differences in gender elasticities which emerge endogenously in a model in which spouses bargain over the allocation of home duties. GBT changes spouses' implicit bargaining power and induces a more balanced allocation of house work and working opportunities between males and females. Because of decreasing returns to specialization in home and market work, social welfare improves by taxing conditional on gender. When income sharing within the family is substantial, both spouses may gain from GBT.
Optimal Taxation, Economics of Gender, Family Economics, Elasticity of Labor Supply
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21.
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Alberto F. Alesina Harvard University - Department of Economics Nicola Fuchs-Schundeln Harvard University - Department of Economics
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| Posted: |
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19 Jul 05
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Last Revised:
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19 Jul 05
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235 (36,064)
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46
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Abstract:
Preferences for redistribution, as well as the generosities of welfare states, differ significantly across countries. In this paper, we test whether there exists a feedback process of the economic regime on individual preferences. We exploit the experiment of German separation and reunification to establish exogeneity of the economic system. From 1945 to 1990, East Germans lived under a Communist regime with heavy state intervention and extensive redistribution. We find that, after German reunification, East Germans are more in favor of redistribution and state intervention than West Germans, even after controlling for economic incentives. This effect is especially strong for older cohorts, who lived under Communism for a longer time period. We find that East Germans' preferences converge towards those of West Germans, and we calculate that it will take one to two generations for preferences to converge completely.
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22.
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Preferences for Redistribution in the Land of Opportunities
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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Posted:
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05 May 01
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Last Revised:
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26 Nov 03
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232 ( 36,574) |
73
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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08 Feb 02
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Last Revised:
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01 Mar 02
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23
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73
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Abstract:
The poor favour redistribution and the rich oppose it, but that is not all. Social mobility may make some of today's poor into tomorrow's rich and since redistributive policies do not change often, individual preferences for redistribution should depend on the extent and the nature of social mobility. We estimate the determinants of preferences for redistribution using individual level data from the US, and we find that individual support for redistribution is negatively affected by social mobility. Furthermore, the impact of mobility on attitudes towards redistribution is affected by individual perceptions of fairness in the mobility process. People who believe that the American society offers equal opportunities to all are more averse to redistribution in the face of increased mobility. On the other hand, those who see the social rat race as a biased process do not see social mobility as an alternative to redistributive policies.
Social mobility, POUM, redistribution
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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14 Dec 01
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Last Revised:
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26 Nov 03
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180
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73
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Abstract:
The poor favor redistribution and the rich oppose it, but that is not all. Social mobility may make some of today's poor into tomorrow's rich and since redistributive policies do not change often, individual preferences for redistribution should depend on the extent and the nature of social mobility. We estimate the determinants of preferences for redistribution using individual level data from the US, and we find that individual support for redistribution is negatively affected by social mobility. Furthermore, the impact of mobility on attitudes towards redistribution is affected by individual perceptions of fairness in the mobility process. People who believe that the American society offers equal opportunities to all are more averse to redistribution in the face of increased mobility. On the other hand, those who see the social rat race as a biased process do not see social mobility as an alternative to redistributive policies.
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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05 May 01
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Last Revised:
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19 Oct 01
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29
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73
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Abstract:
The poor favor redistribution and the rich oppose it, but that is not all. Social mobility may make some of today's poor into tomorrow's rich and since redistributive policies do not change often, individual preferences for redistribution should depend on the extent and the nature of social mobility. We estimate the determinants of preferences for redistribution using individual level data from the US, and we find that individual support for redistribution is negatively affected by social mobility. Furthermore, the impact of mobility on attitudes towards redistribution is affected by individual perceptions of fairness in the mobility process. People who believe that the American society offers equal opportunities to all are more averse to redistribution in the face of increased mobility. On the other hand, those who see the social rat race as a biased process do not see social mobility as an alternative to redistributive policies.
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23.
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Choosing (and Reneging on) Exchange Rate Regimes
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Alberto F. Alesina Harvard University - Department of Economics Alexander F. Wagner University of Zurich - Swiss Banking Institute (ISB)
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Posted:
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29 Jun 03
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31 Mar 04
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214 ( 39,805) |
24
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Alberto F. Alesina Harvard University - Department of Economics Alexander F. Wagner University of Zurich - Swiss Banking Institute (ISB)
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05 Aug 03
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31 Mar 04
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194
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We use data on announced and actual exchange rate arrangements to ask which countries follow de facto regimes different from their de iure ones, that is, do not do what they say. Our results suggest that countries with poor institutional quality have difficulty in maintaining pegging and abandon it more often. In contrast, countries with relatively good institutions display fear of floating, i.e. they manage more than announced, perhaps to signal their differences from those countries incapable of maintaining promises of monetary stability.
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Alberto F. Alesina Harvard University - Department of Economics Alexander F. Wagner University of Zurich - Swiss Banking Institute (ISB)
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| Posted: |
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29 Jun 03
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29 Jun 03
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20
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24
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Abstract:
We use data on announced and actual exchange rate arrangements to ask which countries follow de facto regimes different from their de iure ones, that is, do not do what they say. Our results suggest that countries with poor institutional quality have difficulty in maintaining pegging and abandon it more often. In contrast, countries with relatively good institutions display fear of floating, i.e. they manage more than announced, perhaps to signal their differences from those countries incapable of maintaining promises of monetary stability.
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24.
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Alberto F. Alesina Harvard University - Department of Economics Enrico Spolaore Tufts University - Department of Economics
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| Posted: |
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14 Dec 01
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26 Nov 03
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200 (42,641)
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11
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Abstract:
This paper studies the relationship between international conflict and the size distribution of countries in a model in which both peaceful bargaining and non-peaceful confrontations are possible. We show how the size distribution of countries depends on the likelihood, benefits and costs of conflict and war. We also study the role of international law and show how better defined international 'property rights' may lead to country breakup and more numerous local conflicts.
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25.
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Who Adjusts and When? On the Political Economy of Reforms
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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Posted:
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07 Feb 06
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02 Jul 09
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197 ( 43,271) |
17
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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05 May 06
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02 Jul 09
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32
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Abstract:
Why do countries delay stabilizations of large and increasing budget deficits and inflation? And what explains the timing of reforms? We use the war of attrition model as a guidance for our empirical study on a vast sample of countries. We find that stabilizations are more likely to occur when time of crisis occur, at the beginning of term of office of a new government, in countries with "strong" governments (i.e. presidential systems and unified governments with a large majority of the party in office), and when the executive faces less constraints. The role of external inducements like IMF programs has at best a weak effect, but problem of reverse causality are possible.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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| Posted: |
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07 Feb 06
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Last Revised:
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07 Mar 06
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165
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17
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Abstract:
Why do countries delay stabilizations of large and increasing budget deficits and inflation? And what explains the timing of reforms? We use the war of attrition model as a guidance for our empirical study on a vast sample of countries. We find that stabilizations are more likely to occur when time of crisis occur, at the beginning of term of office of a new government, in countries with 'strong' governments, (i.e. presidential systems and unified governments with a large majority of the party in office), and when the executive faces less constraints. The role of external inducements like IMF programs has at best a weak effect, but problem of reverse causality are possible.
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26.
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Political Jurisdictions in Heterogeneous Communities
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Alberto F. Alesina Harvard University - Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department Caroline M. Hoxby Stanford University
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Posted:
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28 Feb 02
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Last Revised:
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19 Jul 04
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194 ( 43,962) |
35
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Alberto F. Alesina Harvard University - Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department Caroline M. Hoxby Stanford University
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28 Apr 04
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12 May 04
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We investigate whether political jurisdictions form in response to the trade-off between economies of scale and the costs of a heterogeneous population. We consider heterogeneity in income, race, ethnicity, and religion, and we test the model using American school districts, school attendance areas, municipalities, and special districts. We find strong evidence of a trade-off between economies of scale and racial heterogeneity; we also find evidence of a trade-off between economies of scale and income heterogeneity. Conversely, we find little evidence that ethnic or religious heterogeneity shapes jurisdictions. To clarify the direction of causality between heterogeneity and jurisdictions, we exploit shocks to racial heterogeneity generated by the two world wars.
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Alberto F. Alesina Harvard University - Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department Caroline M. Hoxby Stanford University
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| Posted: |
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28 Feb 02
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08 Mar 04
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173
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35
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Abstract:
We investigate the number and size of local political jurisdictions are determined, by focusing on the tradeoff between the benefits of economies of scale and the costs of a heterogeneous population. We consider heterogeneity in income, race, ethnicity, and religion, and we test the model using American school districts, school attendance areas, municipalities, and special districts. Using cross-sectional and panel analysis, we find very little evidence of tradeoffs between economies of scale and ethnic or religious heterogeneity. However, we find evidence of a tradeoff between economies of scale and income heterogeneity and particularly strong evidence of a tradeoff between economies of scale and racial heterogeneity. To clarify the direction of causality between heterogeneity and jurisdictions, we exploit shocks to racial heterogeneity generated by the two World Wars.
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Alberto F. Alesina Harvard University - Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department Caroline M. Hoxby Stanford University
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| Posted: |
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19 Jul 04
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Last Revised:
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19 Jul 04
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21
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35
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Abstract:
We investigate how the number and size of local political jurisdictions in an area is determined. Our model focuses on the tradeoff between the benefits of economies of scale and the costs of a heterogeneous population. We consider heterogeneity in income, race, ethnicity, and religion, and we test the model using American school districts, school attendance areas, municipalities, and special districts. Using both cross-sectional and panel analysis, we find evidence of a significant tradeoff between economies of scale and racial heterogeneity. We find weaker tradeoffs between economies of scale and income or ethnic heterogeneity. That is, it appears that people are willing to sacrifice the most, in terms of economies of scale, in order to avoid racial heterogeneity in their jurisdiction.
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27.
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Alberto F. Alesina Harvard University - Department of Economics Guido Cozzi affiliation not provided to SSRN Noemi Mantovan affiliation not provided to SSRN
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| Posted: |
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08 Aug 09
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08 Aug 09
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184 (46,410)
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Abstract:
Ideas about what is 'fair' above and beyond the individuals position in the income ladder determine preferences for redistribution. We study the dynamic evolution of different economies in which redistributive polices, perception of fairness, inequality and growth are jointly determined. We show how including fairness explains various observed relationship between inequality, redistribution and growth. We also show how different beliefs about fairness can keep two otherwise identical countries in different development paths for a very long time.
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28.
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Technology and Labor Regulations
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Alberto F. Alesina Harvard University - Department of Economics Joseph Zeira Hebrew University of Jerusalem - Department of Economics
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Posted:
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10 Oct 06
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Last Revised:
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06 Aug 08
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184 ( 46,410) |
4
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Alberto F. Alesina Harvard University - Department of Economics Joseph Zeira Hebrew University of Jerusalem - Department of Economics
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| Posted: |
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17 Oct 06
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21 Feb 07
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18
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Many low skilled jobs have been substituted away for machines in Europe, or eliminated, much more so than in the US, while technological progress at the "top", i.e. at the high-tech sector, is faster in the US than in Europe. This paper suggests that the main difference between Europe and the US in this respect is their different labor market policies. European countries reduce wage flexibility and inequality through a host of labor market regulations, like binding minimum wage laws, permanent unemployment subsidies, firing costs, etc. Such policies create incentives to develop and adopt labor saving capital intensive technologies at the low end of the skill distribution. At the same time technical change in the US is more skill biased than in Europe, since American skilled wages are higher. In the last few years some partial labor market reforms in Europe may have started to slow down or even reverse this trend.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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Alberto F. Alesina Harvard University - Department of Economics Joseph Zeira Hebrew University of Jerusalem - Department of Economics
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| Posted: |
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10 Oct 06
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Last Revised:
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06 Aug 08
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166
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4
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Abstract:
Many low skilled jobs have been substituted away for machines in Europe, or eliminated, much more so than in the US, while technological progress at the "top," i.e., at the high-tech sector, is faster in the US than in Europe. This paper suggests that the main difference between Europe and the US in this respect is their different labor market policies. European countries reduce wage flexibility and inequality through a host of labor market regulations, like binding minimum wage laws, permanent unemployment subsidies, firing costs, etc. Such policies create incentives to develop and adopt labor saving capital intensive technologies at the low end of the skill distribution. At the same time technical progress in the US is more skill biased than in Europe, since American skilled wages are higher.
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29.
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Divorce, Fertility and the Shot Gun Marriage
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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Posted:
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02 May 06
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Last Revised:
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28 Sep 06
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181 ( 47,178) |
1
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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26 Jul 06
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28 Sep 06
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17
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Abstract:
Total fertility declined in states that introduced unilateral divorce, which makes dissolution of marriage easier. Also the ratio of out-of-wedlock fertility over total declined. We suggest an explanation (and provide supportive evidence for it) based upon the effect of divorce laws on the probability of entering and exiting marriage. Women planning to have children marry more easily with an easier exit option from marriage. Thus, more children are born in the first years of marriage, while the total marital fertility does not change, probably as a result of an increase in divorces and marital instability.
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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02 May 06
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Last Revised:
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22 Jun 06
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164
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Abstract:
Using the birth certificates data from the Vital Statistics of the USA between 1968 and 1999, we construct state level panel data of different measures of fertility and examine the change in divorce laws. Total fertility declined in states that introduced unilateral divorce, which makes dissolution of marriage easier. Most of this effect is due to a decline of out-of-wedlock fertility. We suggest an explanation (and provide supportive evidence for it) based upon the effect of divorce laws on the probability of entering and exiting marriage. Women planning to have children marry more easily with an easier "exit option" from marriage. Thus, more children are born in the first years of marriage, while the total marital fertility does not change, probably as a result of an increase in divorces and marital instability. The effect of changes in divorce laws is greater among whites than African Americans.
Divorce Laws, Fertility, Marriage
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30.
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Why Do Politicians Delegate?
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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Posted:
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28 Jul 05
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17 Mar 08
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180 ( 47,439) |
3
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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16 Sep 05
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17 Mar 08
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20
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Opportunistic politicians maximize the probability of reelection and rents from office holding. Can it be optimal from their point of view to delegate policy choices to independent bureaucracies? The answer is yes: politicians will delegate some policy tasks, though in general not those that would be socially optimal to delegate. In particular, politicians tend not to delegate coalition forming redistributive policies and policies that create large rents or effective campaign contributions. Instead they prefer to delegate risky policies to shift risk (and blame) on bureaucracies.
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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28 Jul 05
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17 Mar 08
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160
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3
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Abstract:
Opportunistic politicians maximize the probability of reelection and rents from office holding. Can it be optimal from their point of view to delegate policy choices to independent bureaucracies? The answer is yes: politicians will delegate some policy tasks, though in general not those that would be socially optimal to delegate. In particular, politicians tend not to delegate coalition forming redistributive policies and policies that create large rents or effective campaign contributions. Instead they prefer to delegate risky policies to shift risk (and blame) on bureaucracies.
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31.
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Budget Deficits and Budget Institutions
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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Posted:
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28 Jun 98
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Last Revised:
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15 Feb 06
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166 ( 51,337) |
48
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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15 Feb 06
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15 Feb 06
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101
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48
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Abstract:
By discussing the available theoretical and empirical literature, this paper argues that budget procedures and budget institutions do influence budget outcomes. Budget institutions include both procedural rules and balanced budget laws. We critically assess theoretical contributions in this area and suggest several open and unresolved issue. We also examine the empirical evidence drawn from studies on samples of OECD countries, Latin American countries and the United States. We conclude with a discussion of the normative implications of this literature and with some concrete proposals.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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28 Jun 98
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10 May 00
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65
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48
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Abstract:
By discussing the available theoretical and empirical literature, this paper argues that budget procedures and budget institutions do influence budget outcomes. Budget institutions include both procedural rules and balanced budget laws. We critically assess theoretical contributions in this area and suggest several open and unresolved issues. We also examine the empirical evidence drawn from studies on samples of OECD countries, Latin American countries and US states.
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32.
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Alberto F. Alesina Harvard University - Department of Economics David Dollar World Bank - Development Economics Group (DEC)
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| Posted: |
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05 Apr 03
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Last Revised:
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05 Apr 03
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155 (55,125)
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135
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Abstract:
This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients. Colonial past and political alliances are the major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond more to political variables, foreign direct investments are more sensitive to economic incentives, particularly property rights in the receiving countries. We also uncover significant differences in the behavior of different donors.
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33.
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Choosing Electoral Rules: Theory and Evidence from US Cities
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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Posted:
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25 Mar 05
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Last Revised:
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22 Jun 09
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148 ( 57,256) |
9
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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| Posted: |
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11 May 05
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Last Revised:
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22 Jun 09
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21
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9
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Abstract:
This paper studies the choice of electoral rules, in particular, the question of minority representation. Majorities tend to disenfranchise minorities through strategic manipulation of electoral rules. With the aim of explaining changes in electoral rules adopted by US cities (particularly in the South), we show why majorities tend to adopt "winner-take-all" city-wide rules (at-large elections) in response to an increase in the size of the minority when the minority they are facing is relatively small. In this case, for the majority it is more effective to leverage on its sheer size instead of risking to concede representation to voters from minority-elected districts. However, as the minority becomes larger (closer to a fifty-fifty split), the possibility of losing the whole city induces the majority to prefer minority votes to be confined in minority-packed districts. Single-member district rules serve this purpose. We show empirical results consistent with these implications of the model.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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| Posted: |
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25 Mar 05
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Last Revised:
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11 May 05
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127
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9
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Abstract:
This paper studies the choice of electoral rules, in particular the question of minority representation. Majorities tend to disenfranchise minorities through strategic manipulation of electoral rules. With the aim of explaining changes in electoral rules adopted by US cities (particularly in the South), we show why majorities tend to adopt "winner-take-all" citywide rules (at-large elections) in response to an increase in the size of the minority when the minority they are facing is relatively small. In this case, for the majority it is more effective to leverage on its sheer size instead of risking conceding representation to voters from minority-elected districts. However, as the minority becomes larger (closer to a fifty-fifty split), the possibility of losing the whole city induces the majority to prefer minority votes to be confined in minority-packed districts. Single-member district rules serve this purpose. We show empirical results consistent with these implications of the model.
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34.
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Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) Alberto F. Alesina Harvard University - Department of Economics
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| Posted: |
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12 Jul 99
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Last Revised:
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12 Jul 99
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143 (59,080)
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90
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Abstract:
This paper studies both theoretically and empirically the determinants of group formation and of the degree of participation when the population is heterogeneous, both in terms of income and race or ethncity. We are especially interested in whether and how much the degree of heterogeneity in communities infuences the amount of participation in different types of groups. Using survey data on group membership and data on US localities, we find that, after controlling for many individual characteristics, participation in social activities is significatively lower in more unequal and in more racially or ethnically fragmented localities. We also find that those individuals who express views against racial mixing are less prone to participate in groups the more racially heterogeneous their community is.
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35.
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Work and Leisure in the U.S. and Europe: Why So Different?
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Alberto F. Alesina Harvard University - Department of Economics Edward L. Glaeser Harvard University - John F. Kennedy School of Government, Department of Economics Bruce Sacerdote Dartmouth College - Department of Economics
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Posted:
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01 Jun 05
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Last Revised:
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10 Nov 05
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141 ( 59,813) |
37
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Alberto F. Alesina Harvard University - Department of Economics Edward L. Glaeser Harvard University - John F. Kennedy School of Government, Department of Economics Bruce Sacerdote Dartmouth College - Department of Economics
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| Posted: |
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17 Aug 05
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Last Revised:
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10 Nov 05
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44
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Americans average 25.1 working hours per person in working age per week, but the Germans average 18.6 hours. The average American works 46.2 weeks per year, while the French average 40 weeks per year. Why do western Europeans work so much less than Americans? Recent work argues that these differences result from higher European tax rates, but the vast empirical labor supply literature suggests that tax rates can explain only a small amount of the differences in hours between the U.S. and Europe. Another popular view is that these differences are explained by long-standing European 'culture', but Europeans worked more than Americans as late as the 1960s. In this paper, we argue that European labor market regulations, advocated by unions in declining European industries who argued 'work less, work all' explain the bulk of the difference between the U.S. and Europe. These policies do not seem to have increased employment, but they may have had a more society-wide influence on leisure patterns because of a social multiplier where the returns to leisure increase as more people are taking longer vacations.
Hours worked, labor unions, taxation, Europe
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Alberto F. Alesina Harvard University - Department of Economics Edward L. Glaeser Harvard University - John F. Kennedy School of Government, Department of Economics Bruce Sacerdote Dartmouth College - Department of Economics
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| Posted: |
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01 Jun 05
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Last Revised:
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17 Aug 05
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97
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37
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Abstract:
Americans average 25.1 working hours per person in working age per week, but the Germans average 18.6 hours. The average American works 46.2 weeks per year, while the French average 40 weeks per year. Why do western Europeans work so much less than Americans? Recent work argues that these differences result from higher European tax rates, but the vast empirical labor supply literature suggests that tax rates can explain only a small amount of the differences in hours between the U.S. and Europe. Another popular view is that these differences are explained by long-standing European "culture", but Europeans worked more than Americans as late as the 1960s. In this paper, we argue that European labor market regulations, advocated by unions in declining European industries who argued "work less, work all" explain the bulk of the difference between the U.S. and Europe. These policies do not seem to have increased employment, but they may have had a more society-wide influence on leisure patterns because of a social multiplier where the returns to leisure increase as more people are taking longer vacations.
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36.
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
|
29 Jan 09
|
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Last Revised:
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29 Jan 09
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139 (60,599)
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11
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Abstract:
This paper discusses what determines the preferences of individuals for redistribution. We review the theoretical literature and provide a framework to incorporate various effects previously studied separately in the literature. We then examine empirical evidence for the US, using the General Social Survey, and for a large set of countries, using the World Values Survey. The paper reviews previously found results and provides several new ones. We emphasize, in particular, the role of historical experiences, cultural factors and personal history as determinants of preferences for equality or tolerance for inequality.
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37.
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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25 Apr 07
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Last Revised:
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25 Apr 07
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132 (63,338)
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4
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Abstract:
Easier divorce has two effects on marriage rates and fertility. It dilutes the value of marriage, therefore reducing marriage rates and marital fertility and potentially increasing out of wedlock fertility. But easier divorce reduces also the commitment cost of marriage leading women to "try" marriage especially when in child bearing age or even already pregnant. We find that total fertility and out-of-wedlock fertility decline after the introduction of unilateral divorce. Women planning to have children marry more easily with an easier "exit option" from marriage. Thus, more children are born in the first years of marriage, while marital fertility does not change, probably as a result of an increase in divorce and marital instability. Therefore we find strong evidence consistent with the "commitment effect".
Divorce Laws, Fertility, Marriage
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38.
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Alberto F. Alesina Harvard University - Department of Economics Ekaterina V. Zhuravskaya New Economic School
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| Posted: |
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12 Aug 08
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Last Revised:
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27 Mar 09
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130 (64,152)
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2
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Abstract:
This paper has three goals. The first, and perhaps the most important, is to provide a new compilation of data on ethnic, linguistic and religious composition at the sub-national level for a large number of countries. This data set allows us to measure segregation of different ethnic, religious and linguistic groups within the same country. The second goal is to correlate measures of segregation with measures of quality of the polity and policy-making. The third is to construct an instrument that helps to overcome the endogeneity problem that arises because groups move within country borders, partly in response to policies. We find that more ethnically and linguistically segregated countries, i.e., those where groups live more spatially separately, have a substantially lower quality of government. In contrast, we find no relationship between religious segregation and the quality of government.
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39.
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Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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Posted:
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12 Nov 96
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15 Feb 06
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128 ( 64,988) |
102
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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15 Feb 06
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15 Feb 06
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64
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102
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Abstract:
This paper studies how the composition of fiscal adjustments influences their likelihood of "success", defined as a long lasting deficit reduction, and their macroeconomic consequences. We find that fiscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary. On the contrary fiscal adjustments which rely primarily on tax increases and cuts in public investment tend not to last and are contractionary. We discuss alterative explanations for these findings by studying both a full sample of OECD countries and by focusing on three case studies: Denmark, Ireland and Italy.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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12 Nov 96
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13 May 00
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64
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102
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Abstract:
This ppaer studies how the composition of fiscal adjustments influences their likelihood of success, defined as a long lasting deficit reduction, and their macroeconomic consequences. We find that fiscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary. On the contrary fiscal adjustments which rely primarily on tax increases and cuts in public investment tend not to last and are contractionary. We discuss alternate explanations for these findings by studying both a full sample of OECD countries and by focusing on three case studies: Denmark, Ireland and Italy.
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40.
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Large Changes in Fiscal Policy: Taxes Versus Spending
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics
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Posted:
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03 Nov 09
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Last Revised:
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09 Nov 09
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122 ( 67,605) |
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics
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| Posted: |
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09 Nov 09
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09 Nov 09
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93
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Abstract:
We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics
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| Posted: |
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03 Nov 09
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05 Nov 09
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29
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Abstract:
We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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41.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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07 Sep 00
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15 Apr 08
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117 (69,961)
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150
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Abstract:
This paper successfully tests on a sample of 70 countries for the period 1960-85 the following hypotheses. Income inequality, by fueling social discontent, increases socio-political instability. The latter, by creating uncertainty in the politico-economic environment, reduces investment. As a consequence, income inequality and investment are inversely related. Since investment is a primary engine of growth, this paper identifies a channel for an inverse relationship between income inequality and growth. We measure socio-political instability with indices which capture the occurrence of more or less violent phenomena of political unrest and we test our hypotheses by estimating a two-equation model in which the endogenous variables are investment and an index of socio-political instability. Our results are robust to sensitivity analysis on the specification of the model and the measure of political instability, and are unchanged when the model is estimated using robust regression techniques.
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42.
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Alberto F. Alesina Harvard University - Department of Economics Sule Ozler University of California, Los Angeles - Department of Economics Nouriel Roubini Leonard N. Stern School of Business - Department of Economics Phillip Swagel Northwestern University - Department of Economics
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| Posted: |
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14 Sep 00
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11 Apr 08
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109 (74,030)
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90
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Abstract:
This paper investigates the relationship between political instability and per capita GDP growth in a sample of 113 countries for the period 1950-1982. We define "political instability" as the propensity of a government collapse, and we estimate a model in which political instability and economic growth are jointly determined. The main result of this paper is that in countries and time periods with a high propensity of governmental collapse, growth is significantly lower than otherwise. This effect remains strong when we restrict our definition of "government change" to cases of substantial changes of the government.
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43.
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Alberto F. Alesina Harvard University - Department of Economics Beatrice Weder University of Mainz - Department of Economics
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| Posted: |
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29 Sep 99
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Last Revised:
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05 May 00
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100 (78,944)
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70
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Abstract:
Critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies. Supporters argue that foreign aid can be used to reward good governments. This paper documents that there is no evidence that less corrupt governments receive more foreign aid. On the contrary, according to some measures of corruption, more corrupt governments receive more aid. Also, we could not find any evidence that an increase in foreign aid reduces corruption. In summary, the answer to the question posed in the title is 'no.'
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44.
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Preferences for Redistribution
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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Posted:
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29 Mar 09
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Last Revised:
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31 Mar 09
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99 ( 79,529) |
11
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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30 Mar 09
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Last Revised:
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30 Mar 09
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42
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11
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Abstract:
This paper discusses what determines the preferences of individuals for redistribution. We review the theoretical literature and provide a framework to incorporate various effects previously studied separately in the literature. We then examine empirical evidence for the US, using the General Social Survey, and for a large set of countries, using the World Values Survey. The paper reviews previously found results and provides several new ones. We emphasize, in particular, the role of historical experiences, cultural factors and personal history as determinants of preferences for equality or tolerance for inequality.
preferences for redistribution
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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29 Mar 09
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Last Revised:
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31 Mar 09
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57
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11
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Abstract:
This paper discusses what determines the preferences of individuals for redistribution. We review the theoretical literature and provide a framework to incorporate various effects previously studied separately in the literature. We then examine empirical evidence for the US, using the General Social Survey, and for a large set of countries, using the World Values Survey. The paper reviews previously found results and provides several new ones. We emphasize, in particular, the role of historical experiences, cultural factors and personal history as determinants of preferences for equality or tolerance for inequality.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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45.
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Ambiguity and Extremism in Elections
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Alberto F. Alesina Harvard University - Department of Economics Richard Holden Massachusetts Institute of Technology (MIT)
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Posted:
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30 Jun 08
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Last Revised:
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05 Aug 08
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94 ( 82,529) |
1
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Alberto F. Alesina Harvard University - Department of Economics Richard Holden Massachusetts Institute of Technology (MIT)
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| Posted: |
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02 Jul 08
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05 Aug 08
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88
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1
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Abstract:
We analyze a model in which voters are uncertain about the policy preferences of candidates. Two forces affect the probability of electoral success: proximity to the median voter and campaign contributions. First, we show how campaign contributions affect elections. Then we show how the candidates may wish to announce a range of policy preferences, rather than a single point. This strategic ambiguity balances voter beliefs about the appeal of candidates both to the median voter and to the campaign contributors. If primaries precede a general election, they add another incentive for ambiguity, because in the primaries the candidates do not want to reveal too much information, to maintain some freedom of movement in the policy space for the general election. Ambiguity has an option value.
Elections, polarization of platforms, ambiguity, primaries
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Alberto F. Alesina Harvard University - Department of Economics Richard Holden Massachusetts Institute of Technology (MIT)
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| Posted: |
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30 Jun 08
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Last Revised:
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31 Jul 08
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6
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1
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Abstract:
We analyze a model in which voters are uncertain about the policy preferences of candidates. Two forces affect the probability of electoral success: proximity to the median voter and campaign contributions. First, we show how campaign contributions affect elections. Then we show how the candidates may wish to announce a range of policy preferences, rather than a single point. This strategic ambiguity balances voter beliefs about the appeal of candidates both to the median voter and to the campaign contributors. If primaries precede a general election, they add another incentive for ambiguity, because in the primaries the candidates do not want to reveal too much information, to maintain some freedom of movement in the policy space for the general election. Ambiguity has an option value.
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46.
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What Does the European Union Do?
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Ludger Schuknecht European Central Bank (ECB)
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Posted:
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14 Dec 01
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Last Revised:
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16 Apr 02
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91 ( 84,425) |
25
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Ludger Schuknecht European Central Bank (ECB)
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| Posted: |
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17 Jan 02
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16 Apr 02
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25
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25
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Abstract:
We construct a set of indicators to measure the policy-making role of the European Union (European Council, Parliament, Commission, Court of Justice, etc.), in a selected number of policy domains. Our goal is to examine the division of prerogatives between European institutions and national ones, in light of the implications of normative models and in relation to the preferences of European citizens. Our data confirm that the extent and the intensity of policy-making by the EU have increased sharply over the last 30 years. Such increase has taken place at different speeds, and to different degrees, across policy domains. In recent times the areas that have expanded most are the most remote from the EEC's original mission of establishing a free market zone with common external trade policy. We conjecture that the resulting allocation may be partly inconsistent with normative criteria concerning the assignment of policies at different government levels, as laid out in the theoretical literature.
European union, political economy, subsidarity
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Ludger Schuknecht European Central Bank (ECB)
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| Posted: |
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14 Dec 01
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Last Revised:
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20 Dec 01
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66
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25
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Abstract:
We construct a set of indicators to measure the policy-making role of the European Union (European Council, Parliament, Commission, Court of Justice, etc.), in a selected number of policy domains. Our goal is to examine the division of prerogatives between European institutions and national ones, in light of the implications of normative models and in relation to the preferences of European citizens. Our data confirm that the extent and the intensity of policy-making by the ED have increased sharply over the last 30 years. Such increase has taken place, at different speeds, and to different degrees, across policy domains. In recent times the areas that have expanded most are the most remote from the EEC's original mission of establishing a free market zone with common external trade policy. We conjecture that the resulting allocation may be partly inconsistent with normative criteria concerning the assignment of policies at different government levels, as laid out in the theoretical literature.
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47.
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Alberto F. Alesina Harvard University - Department of Economics Edward L. Glaeser Harvard University - John F. Kennedy School of Government, Department of Economics Bruce Sacerdote Dartmouth College - Department of Economics
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| Posted: |
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04 Oct 01
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Last Revised:
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04 Oct 01
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90 (85,109)
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17
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Abstract:
European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre-tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor.
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48.
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Vincenzo Galasso University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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19 Nov 08
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Last Revised:
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19 Nov 08
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89 (85,788)
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Abstract:
This paper investigates whether or not the adoption of the Euro has facilitated the introduction of structural reforms, defined as deregulation in the product markets and liberalization and deregulation in the labor markets. After reviewing the theoretical arguments that may link the adoption of the Euro and structural reforms, we investigate the empirical evidence. We find that the adoption of the Euro has been associated with an acceleration of the pace of structural reforms in the product market. The adoption of the Euro does not seem to have accelerated labor market reforms in the "primary labor market;" however, the run up to the Euro adoption seems to have been accompanied by wage moderation. We also investigate issues concerning the sequencing of goods and labor market reforms.
Euro, structural reforms, deregulation, European labor markets
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49.
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Alberto F. Alesina Harvard University - Department of Economics Dani Rodrik Harvard University - John F. Kennedy School of Government
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| Posted: |
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09 May 00
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Last Revised:
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23 Jan 02
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86 (87,777)
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295
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Abstract:
This paper studies the relationship between political conflict and economic growth in a simple model of endogenous growth with distribute conflicts. We study both the case of two "classes" (workers and capitalists) and the case of a continuum distribution of agents, characterized by different capital/labor shares. We establish several results concerning the relationship between the political influence of the two groups and the level of taxation, public investment, redistribution of income and growth. For example, it is shown that policies which maximize growth are optimal only for a government that cares only about the "capitalists." Also, we show that in a democracy (where the "median voter theorem" applies) the rate of taxation is higher and the rate of growth lower, the more unequal is the distribution of wealth. We present empirical results consistent with these implications of the model.
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50.
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Redistribution Through Public Employment: The Case of Italy
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Alberto F. Alesina Harvard University - Department of Economics Stephan Danninger International Monetary Fund (Research Department) Massimo Rostagno European Central Bank (ECB)
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Posted:
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20 Mar 00
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Last Revised:
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14 Feb 06
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79 ( 92,677) |
27
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Alberto F. Alesina Harvard University - Department of Economics Stephan Danninger International Monetary Fund (Research Department) Massimo Rostagno European Central Bank (ECB)
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| Posted: |
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14 Feb 06
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14 Feb 06
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49
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27
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Abstract:
This paper examines the regional distribution of public employment in Italy and documents two sets of facts. The first is the use of public employment as a subsidy from the North to the less wealthy South. We calculate that about half of the wage bill in the South of Italy can be identified as a subsidy, with both the size of public employment and wage levels used as a redistributive device. The second set of facts concerns the negative effects of subsidized public employment on individuals' attitudes toward job search, education, and risk-taking activities. We conclude that heavy reliance on public employment distorts incentives and discourages the development of market activities in the South.
Public Employment, Redistribution of Income, Public Policy and Economic Behavior of Agents
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Alberto F. Alesina Harvard University - Department of Economics Stephan Danninger International Monetary Fund (Research Department) Massimo Rostagno European Central Bank (ECB)
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| Posted: |
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20 Mar 00
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Last Revised:
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02 Apr 01
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30
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27
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Abstract:
This paper examines the regional distribution of public employment in Italy. It documents two sets of facts. This first is the use of public employment as a subsidy from the North to the less wealthy South. We calculate that about half of the wage bill in the South of Italy can be identified as a subsidy. Both the size of public employment and the level of wages are used as a redistributive device. The second set of facts concerns the effects of a subsidized public employment on individuals' attitudes toward job search, education, 'risk taking' activities etc. Public employment discourages the development of market activities in the South.
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51.
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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18 May 00
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Last Revised:
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10 Apr 01
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77 (94,237)
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15
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Abstract:
Both individual experiences and community characteristics influence how much people trust each other. Using data drawn from US localities we find that the strongest factors that reduce trust are: i) a recent history of traumatic experiences, even though the passage of time reduces this effect fairly rapidly; ii) belonging to a group that historically felt discriminated against, such as minorities (black in particular) and, to a lesser extent, women; iii) being economically unsuccessful in terms of income and education; iv) living in a racially mixed community and/or in one with a high degree of income disparity. Religious beliefs and ethnic origins do not significantly affect trust. The latter result may be an indication that the American melting pot at least up to a point works, in terms of homogenizing attitudes of different cultures, even though racial cleavages leading to low trust are still quite high.
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52.
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Do Women Pay More for Credit? Evidence from Italy
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Alberto F. Alesina Harvard University - Department of Economics Francesca Lotti Bank of Italy Paolo Emilio Mistrulli Bank of Italy
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Posted:
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30 Jul 08
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Last Revised:
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28 Aug 08
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65 (104,389) |
4
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Alberto F. Alesina Harvard University - Department of Economics Francesca Lotti Bank of Italy Paolo Emilio Mistrulli Bank of Italy
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| Posted: |
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04 Aug 08
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28 Aug 08
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2
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4
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Abstract:
The answer is yes. By using a unique and large data set on overdraft contracts between banks and microfirms and self-employed individuals, we find robust evidence that women in Italy pay more for overdraft facilities than men. We could not find any evidence that women are riskier then men. The male/female differential remains even after controlling for a large number of characteristics of the type of business, the borrower and the market structure of the credit market. The result is not driven by women using a different type of bank than men, since the same bank charges different rates to male and female borrowers. Social capital does play a role: high levels of trust loosen credit conditions by lowering interest rates, but this benefit is not evenly distributed, as women benefit from increased social capital less than men.
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Alberto F. Alesina Harvard University - Department of Economics Francesca Lotti Bank of Italy Paolo Emilio Mistrulli Bank of Italy
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| Posted: |
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30 Jul 08
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Last Revised:
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30 Jul 08
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63
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4
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Abstract:
The answer is yes. By using a unique and large data set on overdraft contracts between banks and microfirms and self-employed individuals, we find robust evidence that women in Italy pay more for overdraft facilities than men. We could not find any evidence that women are riskier then men. The male/female differential remains even after controlling for a large number of characteristics of the type of business, the borrower and the market structure of the credit market. The result is not driven by women using a different type of bank than men, since the same bank charges different rates to male and female borrowers. Social capital does play a role: high levels of trust loosen credit conditions by lowering interest rates, but this benefit is not evenly distributed, as women benefit from increased social capital less than men.
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53.
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The Political Economy of International Unions
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Federico Etro Harvard University - Department of Economics
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Posted:
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14 Dec 01
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Last Revised:
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25 Feb 02
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60 (108,959) |
23
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Federico Etro Harvard University - Department of Economics
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| Posted: |
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22 Jan 02
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Last Revised:
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25 Feb 02
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22
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23
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Abstract:
We model an international union as a group of countries deciding together the provision of certain public goods and policies because of spillovers. The countries are heterogeneous either in preferences and/or in economic fundamentals. The trade-off between the benefits of coordination and the loss of independent policymaking endogenously determines the size, the composition and the scope of unions. Our model implies that the equilibrium size of the union is inversely related to the degree of heterogeneity between countries and to the spectrum of common policies. Hence, there is a trade-off between enlargement and deepening of coordination: a union involved in too many collateral activities will be favoured by few countries, while a union which focuses on a core of activities will be favoured by many countries. The political equilibrium implies a bias toward excessive centralization and small size of the union, however. This bias can be corrected if there is a constitutional commitment of the union to centralize only certain policies.
Political economy, federalism, subsidarity, European union
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Federico Etro Harvard University - Department of Economics
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| Posted: |
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14 Dec 01
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20 Dec 01
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38
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23
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Abstract:
We model an international union as a group of countries deciding together the provision of certain public goods and policies because of spillovers. The countries are heterogeneous either in preferences and/or in economic fundamentals. The trade off between the benefits of coordination and the loss of independent policymaking endogenously determines the size, the composition and the scope of unions. Our model implies that the equilibrium size of the union is inversely related to the degree of heterogeneity between countries and to the spectrum of common policies. Hence, there is a trade off between enlargement and deepening of coordination: a union involved in too many collateral activities will be favored by few countries, while a union which focuses on a core of activities will be favored by many countries. However the political equilibrium implies a bias toward excessive centralization and small size of the union. This bias can be corrected if there is a constitutional commitment of the union to centralize only certain policies.
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54.
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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30 Apr 09
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Last Revised:
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25 May 09
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59 (111,827)
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1
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Abstract:
We establish an inverse relationship between family ties, generalized trust and political participation. The more individuals rely on the family as a provider of services, insurance, transfer of resources, the lower is civic engagement and political participation. The latter, together with trust, are part of what is known as social capital, therefore in this paper we contribute to the investigation of the origin and evolution of social capital over time. We establish these results using within country evidence and looking at the behavior of immigrants from various countries in 32 different destination places.
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55.
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Alberto F. Alesina Harvard University - Department of Economics Vittorio Grilli Independent Gian Maria Milesi-Ferretti International Monetary Fund (IMF)
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| Posted: |
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16 Jul 04
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Last Revised:
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02 Aug 08
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54 (114,738)
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45
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Abstract:
This paper studies the institutional and political determinants of capital controls in a sample of 20 OECD countries for the period 1950-1989. One of the most interesting results is that capital controls are more likely to be imposed by strong governments which have a relatively "free" hand over monetary policy, because the Central Bank is not very independent. By imposing capital controls, these governments raise more seigniorage revenue and keep interest rates artificially low. As a result, public debt accumulates at a slower rate than otherwise. This suggests that an institutional reform which makes the Central Bank more independent makes it more difficult for the government to finance its budget. The tightening of the fiscal constraint may force the government to adjust towards a more sound fiscal policy. We also found that, as expected and in accordance with the theory, capital controls are more likely to be introduced when the exchange rate is pegged or managed. On the contrary, we found no effects of capital controls on growth: we reject rather strongly the hypothesis that capital controls reduce growth.
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56.
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Alberto F. Alesina Harvard University - Department of Economics Tamim Bayoumi International Monetary Fund (IMF)
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| Posted: |
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27 Jun 00
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Last Revised:
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27 Jun 00
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54 (114,738)
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15
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Abstract:
This paper shows that in American states balanced budget rules are effective in enforcing fiscal discipline but they have no costs in terms of increased output variability. More specifically, we show that tighter fiscal rules are associated with larger average surplus and lower cyclical variability of the budget balance. However, the lower flexibility of the budget balance does not affect state output variability.
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57.
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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23 Apr 04
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Last Revised:
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22 Sep 08
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51 (117,767)
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26
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Abstract:
This paper provides an explanation of the simultaneous occurrence of large accumulation of external debt, private capital outflow and relatively low domestic capital formation in developing countries. We consider a general equilibrium model in which two types of government with conflicting distributional goals randomly alternate in office. Uncertainty over the fiscal policies of future governments generates private capital flight and small domestic investment. This political uncertainty also provides the incentives for the current government to over accumulate external debt. The model also predicts that left wing governments are more inclined to impose restrictions on capital outflows than right wing governments. Finally, we examine how political uncertainty affects the risk premium charged by lenders and how debt repudiation may occur after a change of political regime.
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58.
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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29 Jan 01
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Last Revised:
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13 Mar 01
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51 (117,767)
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68
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Abstract:
Both individual experiences and community characteristics influence how much people trust each other. Using individual level data drawn from US localities we find that the strongest factors associated with low trust are: i) a recent history of traumatic experiences; ii) belonging to a group that historically felt discriminated against, such as minorities (blacks in particular) and, to a lesser extent, women; iii) being economically unsuccessful in terms of income and education; iv) living in a racially mixed community and/or in one with a high degree of income disparity. Religious beliefs and ethnic origins do not significantly affect trust. The role of racial cleavages leading to low trust is confirmed when we explicitly account for individual preferences on inter-racial relationships: within the same community, individuals who express stronger feelings against racial integration trust relatively less the more racially heterogeneous the community is.
Heterogeneity, Local Interaction, Trust
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59.
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Alberto F. Alesina Harvard University - Department of Economics Nouriel Roubini Leonard N. Stern School of Business - Department of Economics
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| Posted: |
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25 Jun 04
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Last Revised:
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10 Jun 08
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46 (123,264)
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49
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Abstract:
This paper studies whether the dynamic behavior of GNP growth, unemployment and inflation is systematically affected by the timing of elections and of changes of governments. The sample includes the last three decades in 18 OECD economies. We explicitly test the implication of several models of political cycles, both of the opportunistic and the partisan type. Also, we confront the implication of recent rational models with more traditional approaches. Our results can be summarized as follows: a) the political business cycle hypothesis, as formulated in Nordhaus (1975) on output and unemployment is generally rejected by the data. With the exception of Japan, we also reject by the extension of the political business cycle model, with endogenous timing of elections; b) inflation tends to increase immediately after elections, perhaps as a result of pre-electoral expansionary monetary and fiscal policies; c) we find evidence of temporary partisan differences in output and unemployment of long-run partisan differences in the inflation rate as implied by the rational partisan theory by Alesina (1987); d) we find virtually no evidence of permanent partisan differences in output and unemployment.
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60.
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Alberto F. Alesina Harvard University - Department of Economics Robert J. Barro Harvard University - Department of Economics
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| Posted: |
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24 Sep 00
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Last Revised:
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01 Apr 01
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46 (123,264)
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88
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Abstract:
What is the optimal number of currencies in the world? Common currencies affect trading costs and, thereby, the amounts of trade, output, and consumption. From the perspective of monetary policy, the adoption of another country's currency trades off the benefits of commitment to price stability against the loss of an independent stabilization policy. The nature of the tradeoff depends on co-movements of disturbances, on distance, trading costs, and on institutional arrangements such as the willingness of anchor countries to accommodate to the interests of clients.
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61.
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Family Ties and Political Participation
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Show Abstracts |
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hide multiple versions |
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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Posted:
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13 May 09
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Last Revised:
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02 Nov 09
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43 (126,675) |
1
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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13 Oct 09
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Last Revised:
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02 Nov 09
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9
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1
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| |
Abstract:
We establish an inverse relationship between family ties and political participation, such that the more individuals rely on the family as a provider of services, insurance, transfer of resources, the lower is one's civic engagment and political participation. We also show that strong family ties appear to be a substitute for generalized trust, rather than a complement to it. These three constructs-civic engagement, political participation, and trust- are part of what is known as social capital; therefore, in this paper, we contribute to the investigation of the origin and evolution of social capital. We establish these results using within-country evidence and looking at the behavior of immigrants from various countries in 32 different destination places.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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Alberto F. Alesina Harvard University - Department of Economics Paola Giuliano University of California, Los Angeles - Anderson School of Management
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| Posted: |
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13 May 09
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Last Revised:
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13 May 09
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34
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1
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| |
Abstract:
We establish an inverse relationship between family ties, generalized trust and political participation. The more individuals rely on the family as a provider of services, insurance, transfer of resources, the lower is civic engagement and political participation. The latter, together with trust, are part of what is known as social capital, therefore in this paper we contribute to the investigation of the origin and evolution of social capital over time. We establish these results using within country evidence and looking at the behavior of immigrants from various countries in 32 different destination places.
family ties, trust, culture
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62.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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30 Aug 00
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Last Revised:
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30 Aug 00
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43 (126,675)
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68
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Abstract:
This paper considers budget expansions and adjustments in OECD countries in the last three decades. Our main results are: i) on average fiscal expansions are the results of increases in expenditures, particularly of transfer programs, while contractions are typically due to tax increases; ii) however successful (i.e. long lasting), a minority of the total rely primarily on reduction of government wages and employment and cuts in transfer programs; iii) even major successful fiscal adjustments do not seem to have recessionary consequences, on average; iv) different types of governments show different degrees of success at implementing successful fiscal adjustment, with coalition governments showing the worst performance.
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63.
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Alberto F. Alesina Harvard University - Department of Economics Allan Drazen University of Maryland - Department of Economics
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| Posted: |
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25 Oct 00
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Last Revised:
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25 Oct 00
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41 (129,082)
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139
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Abstract:
When a stabilization has significant distributional implications (as in the case of tax increases to eliminate a large budget deficit) different socio-economic groups will attempt to shift the burden of stabilization onto other groups. The process leading to a stabilization becomes a "war of attrition", with each group finding it rational to attempt to wait the others out. Stabilization occurs only when one group concedes and is forced to bear a disproportionate share of the burden of fiscal adjustment. We solve for the expected time of stabilization in a model of "rational" delay based on a war of attrition and present comparative statics results relating the expected time of stabilization to several political and economic variables. We also motivate this approach and its results by comparison to historical episodes.
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64.
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Alberto F. Alesina Harvard University - Department of Economics
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| Posted: |
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30 Mar 00
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Last Revised:
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10 Apr 01
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41 (129,082)
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69
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Abstract:
Current surpluses in the U.S. have been achieved by a combination of a strong economy, low interest rates, and sharp cuts in defence spending. These surpluses follow a period (the eighties) of rather exceptional budget deficits. This paper investigates the origin, size, and expected future patterns of the U.S. budget balance. It discusses how different political forces may generate alternative fiscal scenarios for the U.S. in the next decade.
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65.
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Alberto F. Alesina Harvard University - Department of Economics Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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11 Nov 00
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Last Revised:
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18 Mar 08
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37 (135,392)
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96
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Abstract:
This paper considers an economy in which policymakers with different preferences concerning fiscal policy alternate in office as a result of democratic elections. It is shown that in this situation government debt becomes a strategic variable used by each policymaker to influence the choices of his successors. In particular, if different policymakers disagree about the desired composition of government spending between two public goods, the economy exhibits a deficits bias. Namely, in this economy debt accumulation is higher than it would be with a social planner. According to the results of our model, the equilibrium level of government debt is larger: the larger is the degree of polarization between alternating governments; and the more likely it is that the current government will not be reelected. The paper has empirical implications which may contribute to explain the current fiscal policies in the United States and in several other countries.
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66.
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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| Posted: |
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27 Jun 07
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Last Revised:
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27 Jun 07
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36 (135,392)
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3
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Abstract:
We explore the question of how political institutions and particularly democracy affect economic growth. Although empirical evidence of a positive effect of democracy on economic performance in the aggregate is weak, we provide evidence that democracy influences productivity growth in different sectors differently and that this differential effect may be one of the reasons of the ambiguity of the aggregate results. We provide evidence that political rights are conducive to growth in more advanced sectors of an economy, while they do not matter or have a negative effect on growth in sectors far away from the technological frontier. One channel of explanation goes through the beneficial effects of democracy and political rights on the freedom of entry in markets. Overall, democracies tend to have much lower entry barriers than autocracies, because political accountability reduces the protection of vested interests, and entry in turn is known to be generally more growth-enhancing in sectors that are closer to the technological frontier. We present empirical evidence that supports this entry explanation.
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67.
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Alberto F. Alesina Harvard University - Department of Economics Jeffrey D. Sachs Columbia University - Columbia Earth Institute
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| Posted: |
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25 Jun 04
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Last Revised:
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25 Jun 04
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36 (135,392)
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28
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Abstract:
This paper tests the existence and the extent of a politically induced business cycle in the U.S. in the post-World War II period. The cycle described in this paper is different from the traditional "political business cycle" of Nordhaus. It is based on a systematic difference between the monetary policies of the two parties in a model with labor contracts. From an explicit optimization problem we derive a system of equations for output and money growth. Then we successfully test the non-linear restriction imposed by the theory on the parameters of the system of equations. We cannot reject the hypothesis that money growth has been systematically different under the two types of administration and that this difference contributes to explain output fluctuations.
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68.
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Alberto F. Alesina Harvard University - Department of Economics Ricardo Hausmann Harvard University - John F. Kennedy School of Government Rudolf Hommes Universidad de los Andes Ernesto Hugo Stein Inter-American Development Bank (IADB)
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| Posted: |
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01 Oct 96
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Last Revised:
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10 May 00
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35 (136,681)
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76
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Abstract:
In this paper we collect detailed information on the budget institutions of Latin American countries. We classify these institutions on a `hierarchical'/'collegial' scale, as a function of their transparency and the existence of legislative constraints on the deficit. We then show that `hierarchical' and transparent procedures have been associated with more fiscal discipline in Latin America in the eighties and early nineties.
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69.
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Alberto F. Alesina Harvard University - Department of Economics Nicola Fuchs-Schundeln Harvard University - Department of Economics
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| Posted: |
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20 Jul 06
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Last Revised:
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27 Jul 09
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32 (140,918)
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46
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Abstract:
Preferences for redistribution, as well as the generosities of welfare states, differ significantly across countries. In this paper, we test whether there exists a feedback process of the economic regime on individual preferences. We exploit the "experiment" of German separation and reunification to establish exogeneity of the economic system. From 1945 to 1990, East Germans lived under a Communist regime with heavy state intervention and extensive redistribution. We find that, after German reunification, East Germans are more in favor of redistribution and state intervention than West Germans, even after controlling for economic incentives. This effect is especially strong for older cohorts, who lived under Communism for a longer time period. We further find that East Germans' preferences converge towards those of West Germans. We calculate that it will take one to two generations for preferences to converge completely.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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70.
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Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) Alberto F. Alesina Harvard University - Department of Economics
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| Posted: |
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04 Jul 04
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Last Revised:
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18 Mar 08
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31 (142,387)
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50
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| |
Abstract:
No abstract is available for this paper.
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71.
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Alberto F. Alesina Harvard University - Department of Economics Ignazio Angeloni Italian Finance Ministry - International Financial Relations Federico Etro Harvard University - Department of Economics
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| Posted: |
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14 Dec 01
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Last Revised:
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20 Dec 01
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30 (143,957)
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15
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Abstract:
We study the organization of federations - or international unions - which decide together the provision of certain public goods. The benefit of centralization depends on the internalization of the spillovers, that of decentralization on the adaptability to local differences. We individuate as an optimal institutional design a form of fiscal federalism based on decentralization of expenditures and a system of subsidies and transfers between countries. Since this solution can be politically unfeasible, we study institutional compromises between a centralized federation and a decentralized one. 'Flexible unions' and federal mandates in which both the state and federal levels are involved in providing public goods are typically superior to complete centralization and politically feasible. Finally, we study the effects of a qualified majority voting rule in a centralized system: we find that it can be a useful device to correct a bias toward 'excessive' union level activism.
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72.
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Alberto F. Alesina Harvard University - Department of Economics Stephen E. Spear Carnegie Mellon University - Financial Economics
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| Posted: |
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28 Dec 06
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Last Revised:
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20 Sep 08
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29 (145,664)
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22
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Abstract:
This paper presents a dynamic model of political competition between two "parties" with different policy preferences. A "party" is explicitly modeled as a sequence of overlapping generations of candidates, all of whom face finite decision horizons. In general, there is a conflict between the interests of the individual policymakers and those of the "party" , which includes subsequent generations of candidates. We characterize this conflict and suggest a scheme of "intergenerational transfers" within the party which can resolve or mitigate this conflict. The paper shows how the "overlapping generations" model can be usefully applied to the political arena.
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73.
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Public Goods and Ethnic Divisions
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department
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Posted:
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13 Dec 97
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Last Revised:
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13 Jul 00
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27 (149,394) |
186
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department
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| Posted: |
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13 Jul 00
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Last Revised:
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13 Jul 00
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27
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186
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Abstract:
We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public good the city supplies. We test the implications of the model with three related datasets: US cities, US metropolitan areas, and US urban counties. Results show that productive public goods -- education, roads, libraries, sewers and trash pickup -- in US cities (metro areas/urban counties) are inversely related to the city's (metro area's/county's) ethnic fragmentation, even after controlling for other socioeconomic and demographic determinants. Ethnic fragmentation is negatively related to the share of local spending on welfare. The results are mainly driven by observations in which majority whites are reacting to varying sizes of minority groups. We conclude that ethnic conflict is an important determinant of local public finances.
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department
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| Posted: |
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13 Dec 97
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Last Revised:
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15 Dec 97
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0
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Abstract:
We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public good the city supplies. We test the implications of the model with three related datasets: U.S. cities, U.S. metropolitan areas, and U.S. urban counties. Results show that productive public goods--education, roads, sewers and trash pickup--in U.S. cities (metro areas/urban counties) are inversely related to the city's (metro area's/county's) ethnic fragmentation, even after controlling for other socioeconomic and demographic determinants. Ethnic fragmentation is negatively related to the share of local spending on welfare, and the results are mainly driven by observations in which majority whites are reacting to varying sizes of minority groups. We conclude that ethnic conflict is an important determinant of local public finances.
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74.
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On the Number and Size of Nations
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Alberto F. Alesina Harvard University - Department of Economics Enrico Spolaore Tufts University - Department of Economics
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Posted:
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|
11 May 98
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Last Revised:
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04 Apr 08
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26 (151,483) |
136
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Alberto F. Alesina Harvard University - Department of Economics Enrico Spolaore Tufts University - Department of Economics
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| Posted: |
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15 Jul 00
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Last Revised:
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04 Apr 08
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26
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136
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Abstract:
This paper studies the equilibrium determination of the number of political jurisdictions in different political regimes, democratic or not, and in different economic environments, with more or less economic integration. We focus on the trade off between the benefits of large jurisdictions in terms of economies of scale and the costs of heterogeneity of large and diverse populations. Our model implies that: i) democratization leads to secessions; ii) without an appropriate redistributive scheme (which we characterize) in equilibrium one observes an inefficiently large number of countries; iii) the equilibrium number of countries is increasing in the amount of economic integration. We also study the welfare effects of economic integration and free trade when the number of countries is endogenous.
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Alberto F. Alesina Harvard University - Department of Economics Enrico Spolaore Tufts University - Department of Economics
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| Posted: |
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11 May 98
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Last Revised:
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06 Mar 08
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0
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Abstract:
This paper studies the equilibrium determination of the number of countries in different political regimes, and in different economic environments, with more or less economic integration. We focus on the trade-off between the benefits of large jurisdictions and the costs of heterogeneity of large and diverse populations. Our model implies that (i) democratization leads to secessions; (ii) in equilibrium one generally observes an inefficiently large number of countries; (iii) the equilibrium number of countries is increasing in the amount of economic integration.
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75.
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Alberto F. Alesina Harvard University - Department of Economics
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| Posted: |
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15 Feb 06
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Last Revised:
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15 Feb 06
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25 (153,767)
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Abstract:
This paper develops a theoretical framework for analyzing external debt policies of developing countries and applies it to assess the cases of three Asian countries, namely Korea, the Philippines, and Thailand. The "optimal debt policy" for a developing country is characterized in the first part of the paper. In the second, the experiences of these three countries during the period 1965-83 are compared with this theoretical benchmark. The empirical results show that, during this period, Korea was quite successful in managing its external debt, while the Philippines was less successful. The case of Thailand, in many respects, fell in between the other two, although closer to that of Korea.
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76.
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Alberto F. Alesina Harvard University - Department of Economics Gerald D. Cohen Ziff Brothers Investments - Macro Strategy Nouriel Roubini Leonard N. Stern School of Business - Department of Economics
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| Posted: |
|
09 Jun 04
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Last Revised:
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09 Jun 04
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25 (153,767)
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22
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Abstract:
The purpose of this paper is to test for evidence of opportunistic "political business cycles" in a large sample of 18 OECD economies. Our results can be summarized as follows: 1) We find very little evidence of pre-electoral effects of economic outcomes, in particular, on GDP growth and unemployment; 2) We see some evidence of "political monetary cycles," that is, expansionary monetary policy in election years; 3) We also observe indications of "political budgets cycles," or "loose" fiscal policy prior to elections; 4) Inflation exhibits a post-electoral jump, which could be explained by either the pre-electoral "loose" monetary and fiscal policies and/or by an opportunistic timing of increase in publicly controlled prices, or indirect taxes.
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77.
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Alberto F. Alesina Harvard University - Department of Economics Alessandro Prati International Monetary Fund (IMF) - Research Department Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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14 Dec 02
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Last Revised:
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18 Mar 08
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25 (153,767)
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20
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Abstract:
High debt countries may face the risk of self-fulfilling debt crises. If the public expects that in the future the government will be unable to roll over the maturing debt, they may refuse to buy debt today and choose to hold foreign assets. This lack of confidence may then be self-fulfilling. This paper argues that under certain conditions, the occurrence of a confidence crisia is more likely if the average maturity of the debt is short. On the contrary, a long and evenly distributed maturity structure may reduce such a risk. We consider the recent Italian experience from this perspective. In particular we ask whether recent develnpmencs in che market for government debt ahoy signa of unstable public confidence, and of a risk premium.
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78.
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Alberto F. Alesina Harvard University - Department of Economics Vittorio Grilli Independent
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| Posted: |
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09 Jul 04
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Last Revised:
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09 Jul 04
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22 (161,510)
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19
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Abstract:
No abstract is available for this paper.
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79.
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Alberto F. Alesina Harvard University - Department of Economics Romain T. Wacziarg Stanford Graduate School of Business
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20 Jul 00
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20 Jul 00
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22 (161,510)
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68
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Abstract:
This paper shows that smaller countries have larger public sectors as a share of GDP, and are also more open to trade. These empirical observations are consistent with recent theoretical models explaining country formation and break up.
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80.
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Alberto F. Alesina Harvard University - Department of Economics Eliana La Ferrara University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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19 Jul 00
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19 Jul 00
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22 (161,510)
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92
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Abstract:
This paper studies both theoretically and empirically the determinants of group formation and of the degree of participation when the population is heterogeneous, both in terms of income and race or ethnicity. We are especially interested in whether and how much the degree of heterogeneity in communities influences the amount of participation in different types of groups. Using survey data on group membership and data on US localities, we find that, after controlling for many individual characteristics, participation in social activities is significantly lower in more unequal and in more racially or ethnically fragmented localities. We also find that those individuals who express views against racial mixing are less prone to participate in the groups the more racially heterogeneous their community is.
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81.
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Alberto F. Alesina Harvard University - Department of Economics Enrico Spolaore Tufts University - Department of Economics Romain T. Wacziarg Stanford Graduate School of Business
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| Posted: |
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13 Feb 98
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11 May 00
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22 (161,510)
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56
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Abstract:
Trade liberalization and political separatism go hand in hand. In a world of trade restrictions, large countries enjoy economic benefits because political boundaries determine the size of the market. In a world of free trade and global markets even relatively small cultural, linguistic or ethnic groups can benefit from forming small and homogeneous political jurisdictions that trade peacefully and are economically integrated with others. This paper provides a formal model of the relationship between openness and the equilibrium number and size of countries, and successfully tests two implications of the model. The first one is that the economic benefits of country size depend on and are mediated by the degree of openness to trade. The second is that the history of Nation-State creations and secessions is influenced by the trade regime.
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82.
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Alberto F. Alesina Harvard University - Department of Economics Alex Cukierman Tel Aviv University - Eitan Berglas School of Economics
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| Posted: |
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16 Jul 04
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27 Sep 08
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21 (164,320)
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26
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Abstract:
Politicians have generally two motives: they wish to hold office as long as possible and wish to implement their preferred policies. Thus they face a trade-off between the policies which maximize their choices of reelection and their most preferred policies (or the policies most preferred by the constituency which they represent). This paper analyzes this trade-off in a dynamic electoral model in which the voters are not fully informed about the preferences of the incumbent. First, we show that in general there is incomplete policy convergence: the incumbent follows a policy which is intermediate between the other party ideal policy and his own ideal policy. Second, we show that under some circumstances, the incumbent has an incentive to choose procedures which make it more difficult for voters to pinpoint his preferences with absolute precision. Thus, politicians may prefer to be ambiguous and "hide", at least up to a certain extent, their true preferences. This result holds for a wide range of parameter values and, in some range, even if voters are risk averse.
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83.
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Alberto F. Alesina Harvard University - Department of Economics Philippe Weil Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)
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18 Jun 04
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18 Jun 04
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21 (164,320)
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1
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Abstract:
No abstract is available for this paper.
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84.
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Alberto F. Alesina Harvard University - Department of Economics Morris Paul Fiorina Department of Political Science Stanford University Howard Rosenthal Princeton University - Department of Politics
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| Posted: |
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17 Jan 02
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30 Jan 02
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19 (170,094)
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Abstract:
The last three decades have witnessed a sharp increase in the number of states with split Senate delegations, featuring two senators of different parties. In addition, there is evidence that senators of different parties do not cluster in the middle: they are genuinely polarized. We propose a model which explains this phenomenon. Our argument builds upon the fact that when a Senate election is held, there is already a sitting senator. If the voters care about the policy position of their state delegation in each election, they may favor the candidate of the party which is not holding the other seat. We show that, in general: (1) a candidate benefits if the non-running senator is of the opposing party; (2) the more extreme the position of the non-running senator, the more extreme may be the position of the opposing party candidate. Our "opposing party advantage" hypothesis is tested on a sample including every Senate race from 1946 to 1986. After controlling for other important factors, such as incumbency advantage, coattails and economic conditions, we find reasonably strong evidence of the "opposite party advantage".
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85.
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Alberto F. Alesina Harvard University - Department of Economics John Londregan University of California, Los Angeles - Department of Political Science Howard Rosenthal Princeton University - Department of Politics
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| Posted: |
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28 Dec 06
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27 Jul 07
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18 (172,894)
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12
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Abstract:
No abstract is available for this paper.
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86.
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Alberto F. Alesina Harvard University - Department of Economics Torsten Persson Stockholm University - Institute for International Economic Studies (IIES) Guido Tabellini University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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08 May 06
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18 Mar 08
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17 (175,776)
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1
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Abstract:
No abstract available.
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87.
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Alberto F. Alesina Harvard University - Department of Economics Enrico Spolaore Tufts University - Department of Economics
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| Posted: |
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05 Nov 96
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Last Revised:
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12 May 00
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17 (175,776)
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3
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Abstract:
This paper provides a formal model of endogenous country formation and of choice of defense spending in a world with international conflict. The model is consistent with three observations. First, secessions and, more generally, break-up of countries should follow a reduction in the likelihood of international conflict. Second, the number of regional conflicts between smaller countries may increase as a result of the break-up of larger countries. Third, the size of the 'peace divided' -- i.e., the reduction in the defense spending in a more peaceful world -- is limited by the process of country break-up.
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88.
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Alberto F. Alesina Harvard University - Department of Economics Silvia Ardagna Harvard University - Department of Economics Vincenzo Galasso University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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17 Nov 08
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17 Nov 08
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16 (178,683)
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1
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Abstract:
This paper investigates whether or not the adoption of the Euro has facilitated the introduction of structural reforms, defined as deregulation in the product markets and liberalization and deregulation in the labor markets. After reviewing the theoretical arguments that may link the adoption of the Euro and structural reforms, we investigate the empirical evidence. We find that the adoption of the Euro has been associated with an acceleration of the pace of structural reforms in the product market. The adoption of the Euro does not seem to have accelerated labor market reforms in the primary labor market; however, the run up to the Euro adoption seems to have been accompanied by wage moderation. We also investigate issues concerning the sequencing of goods and labor market reforms.
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89.
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Alberto F. Alesina Harvard University - Department of Economics William Easterly New York University - Stern School of Business, Department of Economics Reza Baqir International Monetary Fund (IMF) - Research Department
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| Posted: |
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28 Oct 98
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Last Revised:
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08 May 00
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13 (187,291)
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31
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Abstract:
Politicians may use disguised' redistributive policies in order to circumvent opposition to explicit tax-transfer schemes. First, we present a theoretical model that formalizes this hypothesis; then we provide evidence that in US cities, politicians use public employment as such a redistributive device. We find that city employment is significantly higher in cities where income inequality and ethnic fragmentation are higher.
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90.
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Segregation and the Quality of Government in a Cross-Section of Countries
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Alberto F. Alesina Harvard University - Department of Economics Ekaterina V. Zhuravskaya New Economic School
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Posted:
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17 Sep 08
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Last Revised:
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02 Dec 08
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12 (190,195) |
2
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Alberto F. Alesina Harvard University - Department of Economics Ekaterina V. Zhuravskaya New Economic School
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| Posted: |
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02 Dec 08
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02 Dec 08
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0
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2
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Abstract:
This paper has three goals. The first (and perhaps the most important one) is to provide a new compilation of data on ethnic, linguistic and religious composition at the sub-national level for a large number of countries. This data set allows us to measure segregation of different ethnic, religious and linguistic groups within the same country. The second goal is to correlate measures of segregation with measures of quality of the polity and policymaking. The third is to construct an instrument that helps to overcome the endogeneity problem due to the fact that groups move within country borders, partly in response to policies. Our results suggest that more segregated countries in terms of ethnicity and language, i.e., those where groups live more spatially separately, have a substantially lower quality of government. In contrast, there is no relationship between religious segregation and the government quality.
Diversity, Ethnicity, Fractionalization, Language, Quality of government, Religion, Segregation
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Alberto F. Alesina Harvard University - Department of Economics Ekaterina V. Zhuravskaya New Economic School
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| Posted: |
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17 Sep 08
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Last Revised:
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24 Sep 08
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12
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2
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Abstract:
This paper has three goals. The first (and perhaps the most important one) is to provide a new compilation of data on ethnic, linguistic and religious composition at the sub-national level for a large number of countries. This data set allows us to measure segregation of different ethnic, religious and linguistic groups within the same country. The second goal is to correlate measures of segregation with measures of quality of the polity and policymaking. The third is to construct an instrument that helps to overcome the endogeneity problem due to the fact that groups move within country borders, partly in response to policies. Our results suggest that more segregated countries in terms of ethnicity and language, i.e., those where groups live more spatially separately, have a substantially lower quality of government. In contrast, there is no relationship between religious segregation and the government quality.
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91.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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27 Jul 00
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27 Jul 00
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12 (190,195)
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8
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Abstract:
A fiscal program that redistributes income from rich to poor individuals indirectly redistributes tax revenues from regions hit by a favorable shock to regions hit by an unfavorable one. Centralized fiscal redistribution has therefore been advocated as a way to insure individuals against region-specific shocks. In this paper, we argue that a centralized fiscal policy, while reducing the uncertainty on the tax base, creates uncertainty on the tax rate. This occurs because regions hit by different shocks have contrasting interests on the choice of the policy instrument. Using a simple model with two regions and linear taxes, we show that the higher uncertainty on the policy instrument might more than offset the lower uncertainty on the tax base, thus making a majority of agents in each region worse off in a centralized regime. The model is a special case of a more general idea. Heterogeneous entities can reap numerous advantages from integration: mutual insurance (on which we focus), economies of scale, more bargaining power are only a few of them. However, at the same time the same process of integration can increase the unpredictability of any endogenous policy, because more diverse entities participate in the decision-making process, and therefore the opportunities for disagreement increase. In principle, this second effect might offset the advantages of integration.
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92.
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Alberto F. Alesina Harvard University - Department of Economics
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| Posted: |
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14 Apr 07
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Last Revised:
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14 Apr 07
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9 (198,667)
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Abstract:
This paper extends the spatial theory of voting to an institutional structure in which policy choices are a function of the composition of the legislature and of the executive. In an insti tutional setup in which the policy outcome depends upon relative plurality, each voter has incentives to be strategic since the outcome depends upon how everybody else votes. By applying to this game between voters the refinements of Strong Nash and Coalition Proof Nash we prove existence of equilibria with properties which appear intuitive and realistic. In fact, the model has several testable implications which seem consistent with some observed patterns of voting behavior in the United States and perhaps in other democracies in which the executive is directly elected. For instance, the model predicts: a) split-ticket voting; b) for some parameter values, a split government with different parties controlling the executive and the majority of the legislature; and c) the mid-term electoral cycle.
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93.
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Alberto F. Alesina Harvard University - Department of Economics Vittorio Grilli Independent
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| Posted: |
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17 Oct 07
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Last Revised:
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17 Oct 07
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4 (209,890)
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5
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Abstract:
No abstract is available for this paper.
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94.
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Alberto F. Alesina Harvard University - Department of Economics George-Marios Angeletos Massachusetts Institute of Technology (MIT) - Department of Economics
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| Posted: |
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07 Oct 09
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Last Revised:
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08 Oct 09
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1 (216,028)
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26
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Abstract:
Different beliefs about how fair social competition is and what determines income inequality, influence the redistributive policy chosen democratically in a society. But the composition of income in the first place depends on equilibrium tax policies. If a society believes that individual effort determines income, and that all have a right to enjoy the fruits of their effort, it will chose low redistribution and low taxes. In equilibrium effort will be high, the role of luck limited, market outcomes will be quite fair, and social beliefs will be self-fulfilled. If instead a society believes that luck, birth, connections and/or corruption determine wealth, it will tax a lot, thus distorting allocations and making these beliefs self-sustained as well. We show how this interaction between social beliefs and welfare policies may lead to multiple equilibria or multiple steady states. We argue that this model can contribute to explain US vis a vis continental European perceptions about income inequality and choices of redistributive policies.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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95.
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Philippe Aghion Harvard University - Department of Economics Alberto F. Alesina Harvard University - Department of Economics Francesco Trebbi University of Chicago - Booth School of Business
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| Posted: |
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11 Jun 07
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Last Revised:
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11 Jun 07
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0 (0)
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Abstract:
We explore the question of how political institutions and particularly democracy affect economic growth. Although empirical evidence of a positive effect of democracy on economic performance in the aggregate is weak, we provide evidence that democracy influences productivity growth in different sectors differently and that this differential effect may be one of the reasons of the ambiguity of the aggregate results. We provide evidence that political rights are conducive to growth in more advanced sectors of an economy, while they do not matter or have a negative effect on growth in sectors far away from the technological frontier. One channel of explanation goes through the beneficial effects of democracy and political rights on the freedom of entry in markets. Overall, democracies tend to have much lower entry barriers than autocracies, because political accountability reduces the protection of vested interests, and entry in turn is known to be generally more growth-enhancing in sectors that are closer to the technological frontier. We present empirical evidence that supports this entry explanation.
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96.
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Alberto F. Alesina Harvard University - Department of Economics Howard Rosenthal Princeton University - Department of Politics
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| Posted: |
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21 Jun 01
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Last Revised:
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21 Jun 01
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0 (0)
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Abstract:
In standard spatial models of elections, parties with policy preferences take divergent positions. Their platform positions are less separated than are the parties' ideal policies. If policy is the result of an executive--legislative compromise, the policy preferences of the parties can be moderated by voter behavior. Divided government may result. Since parties anticipate the moderated outcomes, they have an added incentive to choose separated platforms. Consequently, divergence in platforms is greater than in the standard model, especially when uncertainty is high and the legislature more powerful than the executive. For some parameters, parties may even 'posture' by adopting platforms that are more extreme than their 'true' ideal points. Keyword(s): Elections, Parties, Platform positions, Policies
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97.
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Alberto F. Alesina Harvard University - Department of Economics Roberto Perotti University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)
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| Posted: |
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11 May 98
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Last Revised:
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04 Sep 98
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0 (0)
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Abstract:
In all industrial countries, fiscal policy is increasingly about redistribution. In this paper, we study redistribution across different types of agents in a world characterized by the presence of labor unions and distortionary taxation. We show that an increase in transfers financed by distortionary taxation has nonlinear effects on unit labor costs relative to the other countries, depending on the degree of centralization of the wage- setting process in the labor market. We find considerable empirical support for the model in a sample of 14 OECD countries.
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