Betrayed by the elites: how corruption amplifies the political effects of recessions

Carlos Sanz, Albert Solé-Ollé () and Pilar Sorribas-Navarro ()
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Albert Solé-Ollé: University of Barcelona & IEB
Pilar Sorribas-Navarro: University of Barcelona & IEB

No 2020/02, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: We investigate whether corruption amplifies the political effects of economic crises. Using Spanish municipal-level data and a difference-in-difference strategy, we find that local unemployment shocks experienced during the Great Recession (2008-2015) increased political fragmentation. This effect was four times larger in municipalities exposed to malfeasance than in municipalities without a history of political corruption. We bolster this evidence by showing that, conditional on province and population-strata fixed effects, there is no evidence of differential pre-trends. We also find that the interaction of unemployment and corruption harms the two traditional main parties and benefits especially the new party on the left (Podemos).

Keywords: Accountability; Corruption; Political Fragmentation; Economic Crisis (search for similar items in EconPapers)
JEL-codes: D72 D73 H12 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2020
New Economics Papers: this item is included in nep-eur, nep-his and nep-pol
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2020-02

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