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

Willem Sas (), Gianmarco Daniele and Amedeo Piolatto

No 1157, Working Papers from Barcelona School of Economics

Abstract: The impact of federal policies often depends on fixed regional differences (economic, historical, geographical). Certain regions can therefore be seen as permanently benefiting from the federation and others as losing. We show that this distorts voting behaviour in two ways. First, voters strategically elect federal representatives that are extremely protective of regional interests. Second, they suboptimally invest in locally funded goods. This distortion is U-shaped in expected federal benefits. Lastly, we do not observe the usual race to be included in the federal coalition, which would reduce the distortion. We test these predictions on national and European Parliamentary elections since 1990, and find that extreme voting is indeed U-shaped: winning and losing states distort more than those in the middle. We conclude that federal political structures foment political polarisation, especially when federal decisions require large consensus. Loosening the ties between representatives and their constituency may mitigate this problem.

Keywords: federalism; political extremism; populism; strategic delegation; euroscepticism; distorted public provision; EU elections; suboptimal political equilibrium (search for similar items in EconPapers)
JEL-codes: D72 H11 H7 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-cdm, nep-pol, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Does the Winner Take It All? Redistributive Policies and Political Extremism (2020)
Working Paper: Does the winner take it all? Redistributive policies and political extremism (2020)
Working Paper: Who Sent You? Strategic Voting, Transfers and Bailouts in a Federation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1157

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