The Power of Parties
53 Pages Posted: 22 Feb 2013
Date Written: February 21, 2013
As with the market for goods and services, democratic competition involves political parties offering their services (policy programs) to citizen-consumers who vote for their preferred partisan supplier. Little is known about the partial effect of a shift in parties’ seat shares for given voter preferences, particularly in proportional representation systems. We estimate party effects using a regression discontinuity design tailored to proportional systems. Based on rich local government data, the analyses show that parties matter for fiscal policies. A larger left-wing party leads to more property taxation and higher user charges. It also leads to higher spending on child care but less on old-age care. These effects are caused both by changes in the representation of individual parties and by shifts between the party blocs.
Keywords: fiscal policy, proportional representation, regression discontinuity design
JEL Classification: C230, D720, H710, H720
Suggested Citation: Suggested Citation