Left in Charge: Political Rule and the Rise of Local Welfare

Casper Worm Hansen and Peter Sandholdt Jensen

No 21047, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study how institutional constraints on executive selection shape redistributive policy, using a 1919 Danish reform that allowed town councils to democratically elect mayors. While the reform applied uniformly across towns, it made left-wing executive control politically feasible for the first time, particularly in towns with stronger prior support for the Social Democratic party. Exploiting predetermined Social Democratic vote shares from the 1917 election interacted with the post-reform period, we identify the causal effect of Social Democratic executive control on local public finance. We show that Social Democratic mayors substantially increased social spending, especially on poor relief and public assistance, with these expansions financed primarily through higher direct taxes. We find no robust evidence that these policies reduced local economic activity. The results highlight how removing institutional constraints on executive selection can translate latent voter preferences into concrete redistributive policy outcomes.

Keywords: Democratization; Redistribution (search for similar items in EconPapers)
JEL-codes: H53 H71 N44 O43 (search for similar items in EconPapers)
Date: 2026-01
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