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Ideology or Voters? A Quasi-Experimental Test of Why Left-Wing Governments Spend More

Benoît Le Maux, Kristýna Dostálová and Fabio Padovano
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Kristýna Dostálová: CREM CNRS UMR6211, University Rennes 1 & Condorcet Center for Political Economy, France
Fabio Padovano: CREM CNRS UMR6211, University Rennes 1 & Condorcet Center for Political Economy, France

Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS from Condorcet Center for political Economy

Abstract: In the literature, there is a widespread consensus that left-wing governments raise taxes and public spending more than their right-wing counterparts. We demonstrate that this result must be interpreted with caution. What might seem a partisan effect, due to the direct impact of parties’ ideology on public spending, might actually be a selection bias, because changes in the distribution of voters’ preferences determine changes of the ideology of the government in office. We overcome this problem of observational equivalence by applying two identification strategies, regression discontinuity design and propensity score matching. Using data from the French local public sector, we show that left-wing governments facing the same economic situation as rightwing ones do not spend more, particularly in the case of social expenditures. This result rules out the partisan-politicians hypothesis and lends support to demand driven policy selection processes.

Keywords: Public services; Party ideology; Redistribution; Partisan effects; Selection bias (search for similar items in EconPapers)
JEL-codes: H72 H40 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-pol
Date: 2017-10
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Persistent link: https://EconPapers.repec.org/RePEc:tut:cccrwp:2017-05-ccr

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