Direct Democracy, Voter Preferences and Government Spending

51 Pages Posted: 22 Aug 2005 Last revised: 25 Sep 2013

See all articles by Patricia Funk

Patricia Funk

University of Lugano

Christina Gathmann

Alfred-Weber Institut; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 10, 2013

Abstract

This article uses unique voting data on 331 federal propositions to estimate voter preferences in Swiss cantons. We document that preferences vary systematically with canton characteristics. In particular, cantons whose voters are more conservative, less in favor of redistribution and less supportive of public spending tend to have stronger direct democracy. We show that voter preferences have a stable and sizable effect on government spending even conditional on many observable canton characteristics. We then revisit the relationship between direct democracy and public spending. Once we fully control for voter preferences, the cross-sectional correlation between direct democracy and government spending declines by roughly 20 percent. The results in this article provide empirical support for models, in which both voter preferences and direct democratic institutions are important determinants of the size of government.

Keywords: Voter Preferences, Institutions, Direct Democracy, Fiscal Policy, Switzerland

JEL Classification: H11, H50, H62, H70

Suggested Citation

Funk, Patricia and Gathmann, Christina, Direct Democracy, Voter Preferences and Government Spending (January 10, 2013). Available at SSRN: https://ssrn.com/abstract=784446 or http://dx.doi.org/10.2139/ssrn.784446

Patricia Funk

University of Lugano ( email )

Via Giuseppe Buffi 13
Lugano, Ticino 6900
Switzerland

Christina Gathmann (Contact Author)

Alfred-Weber Institut ( email )

Bergheimer Str. 20
Heidelberg, 69115
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/index_html?lang=en&mainframe=http%3A//www.iza.org/en/webcontent/personnel/photos%

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

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.stanford.edu/~cgathman

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