Endogenous Preferences: The Political Consequences of Economic Institutions

Abstract:     
This paper studies the broad left-right voting patterns across Western democracies since 1960. Using a novel data set for the median voter, the paper finds that voting behaviour is closely related to the presence of specific political-economic institutions. Labour organization, skill specificity, and public sector employment are associated with left-right voting behaviour and the presence of institutional complementarities may thus influence electoral outcomes. This research therefore suggests that coordinated and liberal market economies generate economic incentives that help sustain the broadly observed left-right voting patterns. Statistical analyses indicate that revealed voter preferences are endogenous to the variety of capitalism although reverse causality cannot be fully ruled out. This paper places political economy at the heart of voting behaviour and implies the existence of institutional advantages to partisan politics.

Number of Pages in PDF File: 35

Keywords: Political Economy, Median Voter, Voting Behavior, Panel Data, Instrumental Variables

JEL Classification: C23, D72, H5, J24, J51, O57, P51

working papers series