Why Does Social Capital Increase Government Performance? The Role of Local Elections across Italian Municipalities

Alberto Batinti (albertobatinti@yahoo.com), Andrea Filippetti (andrea.filippetti@cnr.it) and Luca Andriani
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Luca Andriani: Department of Management, Birkbeck, University of London

No 13, Management Working Papers from Birkbeck Department of Management

Abstract: There is wide consensus that social capital increases government performance. However, the very mechanism underlying the relationship between social capital and well-performing governments remains unclear. In this paper we focus on the budgetary composition of local governments and find that the joint effect of larger social capital and higher quality in government’s spending improves the re-election chances of incumbent policy makers. By looking at 8,000 Italian municipalities over the period 2003-2012, we show that incumbent mayors who carry out a forward-looking and transparent fiscal agenda are more likely to be reelected where the level of local social capital is larger. In contextswith larger social capital, we obtain a non-trivial average effect of a 54% larger probability to be reelected when a more forward-looking agenda is in place. Thus, the good conduct of incumbent mayors is rewarded, but only in contexts with more social capital. Twin estimates considering a more transparent fiscal agenda are not significantbut show the predicted sign and the comparable size of a 31% larger probability. Our evidence is robust when controlling for the political budget cycle, and provides ground for further exploration of the electoral mechanism as an important channel to explain the connection between social capital and good government performance.

Pages: 30 pages
Date: 2017-04, Revised 2017-04
New Economics Papers: this item is included in nep-cdm, nep-pol, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published on Birkbeck Deparment of Management web site, April 2017, pages 1-30

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