Leaders’ Impact on Public Spending Priorities: The Case of the German Laender

Joint Discussion Paper Series in Economics No. 09-2012

36 Pages Posted: 14 Feb 2012 Last revised: 10 Sep 2012

See all articles by Bernd Hayo

Bernd Hayo

University of Marburg - School of Business & Economics

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: August 6, 2012

Abstract

We examine determinants of the composition of public expenditure in the German Laender (states) over the period 1992–2008, as the Laender exhibit a high degree of institutional and political homogeneity and are endowed with extensive fiscal competences. Our prime contribution is an investigation into how political leaders’ socioeconomic background influences public spending priorities. Applying sociological theory, we link preferences for the composition of public spending to social status. In contrast to approaches relying on political budget cycles or partisan theory, we find strong and theory-consistent evidence that prime ministers tend to favour fiscal policies supporting the social class in which they are socialised. Governments led by prime ministers from a poor socioeconomic background spend significantly more on social security, education, health, infrastructure, and public safety.

Keywords: Leadership, socioeconomic status, social rivalry, public expenditure composition

JEL Classification: E62, H75, H76

Suggested Citation

Hayo, Bernd and Neumeier, Florian, Leaders’ Impact on Public Spending Priorities: The Case of the German Laender (August 6, 2012). Joint Discussion Paper Series in Economics No. 09-2012. Available at SSRN: https://ssrn.com/abstract=2005020 or http://dx.doi.org/10.2139/ssrn.2005020

Bernd Hayo (Contact Author)

University of Marburg - School of Business & Economics ( email )

Universitaetsstr. 24
Marburg, D-35032
Germany
++49(0)6421-28-23091 (Phone)
++49(0)6421-28-23193 (Fax)

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
58
Abstract Views
642
rank
387,774
PlumX Metrics