Does the Winner Take It All? Redistributive Policies and Political Extremism

IEB Working Paper N. 2020/01

73 Pages Posted: 22 Oct 2020 Last revised: 17 Apr 2023

See all articles by Gianmarco Daniele

Gianmarco Daniele

University of Milan - Faculty of Law; Bocconi University

Amedeo Piolatto

Autonomous University of Barcelona; Barcelona School of Economics; Barcelona Institute of Economics

Willem Sas

University of Stirling - Department of Economics; KU Leuven - Department of Economics

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Date Written: July 9, 2020

Abstract

We show that regional heterogeneity of underlying fundamentals (e.g. economic history, geography, natural resources, social capital) can lead to extreme voting in federations. When the outcome of federal policies { such as transfer schemes, market regulation, migration targets { depends on these fundamentals, the set of regions that benefits or loses from such a policy is fixed exogenously (for each given policy). This creates a strategic incentive for the median voter to elect extremely protective federal representatives, who will distort redistribution in favor of their constituency by influencing the choice of the policy magnitude. Interestingly, the benefits of selecting tough negotiators outweigh those of belonging to the ruling coalition. We test our predictions by looking at parties' performances at national and European Parliament elections from 1990 onward, and find that strategic voting is indeed U-shaped: winning and losing member states vote more extremely than those in the middle. Our online survey provides further evidence.

Keywords: Strategic Delegation, Interregional Redistribution, Political Extremism, Federalism, Bargaining, Coalitions, EU Elections, Euroscepticism, Populism

JEL Classification: H6, H71, H74, H77

Suggested Citation

Daniele, Gianmarco and Piolatto, Amedeo and Sas, Willem, Does the Winner Take It All? Redistributive Policies and Political Extremism (July 9, 2020). IEB Working Paper N. 2020/01, Available at SSRN: https://ssrn.com/abstract=3685822 or http://dx.doi.org/10.2139/ssrn.3685822

Gianmarco Daniele (Contact Author)

University of Milan - Faculty of Law ( email )

Via Festa del Perdono, 7
20122 Milano
Italy

Bocconi University ( email )

Via Sarfatti 25
Milan, MI 20136
Italy

Amedeo Piolatto

Autonomous University of Barcelona ( email )

Department of Economics and Economic History
Edifici B - Campus Bellaterra
Barcelona, 08193
Spain

HOME PAGE: http://https://sites.google.com/site/piolatto/

Barcelona School of Economics ( email )

Carrer de Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Barcelona Institute of Economics ( email )

c/ John M. Keynes, 1-11
Barcelona, 08034
Spain

Willem Sas

University of Stirling - Department of Economics ( email )

Stirling, FK9 4LA
United Kingdom

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

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