How Do Electoral Systems Affect Fiscal Policy? Evidence from State and Local Governments, 1890 to 2005
Universitat Pompeu Fabra
Alfred-Weber Institut; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); University of Mannheim
June 18, 2009
Using a new data set from 1890 to 2000, we estimate how the adoption of proportional representation affects policies in Swiss cantons. We show that proportional systems shift spending toward broad goods (e.g. education and welfare bene fits) but decrease spending on targetable goods (e.g. roads and agricultural subsidies). We find little evidence that proportional representation increases the size of government. We also demonstrate that compositional changes of the legislature, i.e. party fragmentation and better representation of left-wing parties, are associated with more spending. The direct electoral incentives of proportional rule appear to reduce government spending.
Number of Pages in PDF File: 52
Keywords: Electoral System, Proportional Rule, Fiscal Policy, Switzerland
JEL Classification: H11, H52, H53, N44working papers series
Date posted: September 3, 2008 ; Last revised: June 22, 2009
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