Positive Political Economics 2025-07-21

Elections in fragile democracies are not merely contests over policy but battles for control over state resources, including foreign aid. Aid provides local governments with substantial discretionary funds, creating strong incentives for rent-seeking political actors to capture political office. To win elections, political actors, both in government and opposition, try to reduce electoral competition through targeted political violence, especially in weakly institutionalized settings, where the economic stakes from gaining (or losing) office are higher and the potential costs of using targeted violence are limited. We empirically test this argument using novel geo-located data on aid disbursements from 18 European donors and the United States, covering the period from 1990 to 2020. Applying an instrumental variables (IV) approach, we find that foreign aid is associated with higher levels of targeted political violence against local authorities and politicians, in particular during elections and in contexts with weak institutions and strong informal politics. These findings highlight the unintended consequences of foreign aid, showing how it can lead to targeted political violence by increasing the stakes of political competition. Axel Dreher Jingke Pan Christina Schneider foreign aid, targeted political violence, elections 2025 This paper investigates how concurrent national and local elections affect the local political participation and competition. Leveraging a quasi-experimental framework provided by Italy’s staggered electoral timing, the paper employs a difference-in-differences design. Estimates reveal that municipalities holding concurrent elections exhibit lower levels of local participation and competition. Moreover, the concurrent election increases participation by candidates with nationally-established parties, while decreases participation with independent parties. This further translates into a higher votes share for nationally-established parties and a consequent higher probability of election. Elected mayors tend to have lower education and experience in office, while they are more likely to be from the municipality they were elected in. Further, elected mayors are able to attract more intergovernmental transfers, without substantially affecting local spending patterns. Frattini, Federico Fabio Institutional and Behavioral Economics, Political Economy 2025-07-07 We estimate the impact of a political party’s ability to unilaterally redistrict Congressional seats upon partisan seat share allocations in the U.S. House of Representatives. Controlling for stateXdecade and year effects, we find an 8.2 percentage point increase in the Republican House seat share in the three elections following Republican control over redistricting in the past two decades. We only find significant effects for Democrats in large states. Effects are one half of the average seat gap between the parties in the 2010s. Differences across parties reflect more denied trifectas due to an opposite party governor in Democratic states and greater impacts for Republicans in small states. Differences do not reflect a rise in racial gerrymandering. Kenneth Coriale Daniel A. Kolliner Ethan Kaplan 2025-05 Stimulus transfers are widely used during economic downturns, yet they are often poorly targeted from an economic perspective. I show that political incentives might help explain this discrepancy. I study one of the largest stimulus tax credits in Italy which excluded the poorest individuals and targeted middle-income earners. Leveraging quasi-random geographic variation in recipient shares and a difference-in-differences design, I find that the transfer raised the incumbent party’s vote share by 0.18 percentage points per 1 pp rise in recipients. These gains persist for at least five years. Political returns are stronger in areas with relatively richer beneficiaries, despite weaker consumption responses, and electoral punishment for exclusion is similarly asymmetric: higher-income excluded individuals reduce support for the incumbent, while poorer excluded individuals do not. Voters also punish incumbents when transfers are revoked, helping explain why temporary programs are rarely repealed. A counterfactual transfer targeting poorer households would have increased the consumption response by 30\% but reduced electoral returns by at least 15\%. These findings highlight a key political-economy trade-off in stimulus design, where electoral incentives skew transfers toward politically responsive recipients, as opposed to consumption responsive recipients. JEL: D72, H23, H53, I38, O15. Silvia Vannutelli 2025-06 We estimate the causal effect of education on political preferences exploiting a large expansion in the supply of higher education in the UK as a result of the Further and Higher Education Act (1992). We use this exogenous policy change to instrument years of schooling and find that an additional year of education decreases the likelihood of voting for the right-of-centre Conservative party by 8.4 percentage points, and decreased the probability of voting ‘Leave’ in the 2016 Brexit referendum by 4.9pp. Matt Dickson Kalyan Kumar Kameshwara 2025 Flamino et al. (2023) estimate the levels of ideological polarization and echo chamber behavior for Twitter (now X) users during the 2016 and 2020 U.S. presidential elections using political bias classification and network analysis methods. Using 873 million tweets, they find a decline in the proportion of fake and extremely biased content but identify an increase in echo chamber behaviors and latent ideological polarization among both users and influencers over the investigated period. Using the Twitter data and analysis code provided in the complementary OSF.io repository, we successfully reproduced the results of their analysis with only minor deviations due to small technical adjustments. In general, social media analyses frequently blur the distinction between reproduction and replication due to the dynamic nature of platform data and changing access policies resulting in difficulties retrieving consistent datasets over time. Hence, we conducted a robustness check by querying the Twitter/X Batch Compliance API to evaluate how many tweets from the initial dataset remain accessible today. Our "rehydration" attempts exposed substantial limitations in the Twitter/X API, as data retrieval issues arose across both free and paid access tiers, preventing us from re-collecting the original dataset or obtaining reliable estimates of tweet accessibility from the original study. While the study was largely reproducible with the intermediary and aggregated data provided, its full reproducibility and replicability are constrained by restrictive social media platform data access policies. Knöpfle, Philipp Haim, Mario Breuer, Johannes 2025 We investigate the bidirectional relationship between immigration and right-wing populism, which we characterize as a self-reinforcing dynamic process where anti-immigrant rhetoric and populist policies lead to a deterioration in the average education and skill level of immigrants. The deterioration in the ratio of high-skill to low-skill immigrants in turn fuels populist support and anti-immigration attitudes, creating what we call “the vicious circle of xenophobia”. We review some historical and contemporary studies that are suggestive of such vicious circle. In particular, recent crosscountry evidence shows that low-skill immigration tends to exacerbate populism, while high-skill immigration tends to mitigate it. Conversely, populist policies and xenophobic attitudes have a strong repulsive effect on highly-skilled immigrants and result in adverse immigrant selection. We use the empirical results from those studies to inform a theoretical model of joint determination of immigrants’ skill-ratio and right-wing populism levels. The model displays multiple equilibria, with the inferior equilibrium – corresponding to our vicious circle – characterized by high levels of right-wing populism and a high proportion of low-skill workers among immigrants. In this framework, structural trends such as internet penetration, economic erosion of the middle class, demographic pressure from poor countries as well as adverse cyclical shocks make the good, efficient equilibrium less likely and the inferior equilibrium of explosive populism and deteriorated immigrants’ skill-ratio more likely. Frédéric Docquier Hillel Rapoport Right-Wing Populism;Immigration;Vicious Circle 2025-05 Aggarwal et al. (2023) analyze the effects of an 8-month-long advertising program on voter turnout in the 2020 US presidential election. Therein, 2 million voters were exposed to pro-Biden and anti-Trump advertisements on social media in five battleground states. The study finds no average treatment effect on voter turnout but differential effects when modeling by Trump support: Biden supporters are 0.4 percentage points more likely to vote while Trump supporters are 0.3 percentage points less likely to vote (t = −2.09 with p-value Geissler, Dominique Maarouf, Abdurahman Bär, Dominik Pröllochs, Nicolas Feuerriegel, Stefan 2025 We study candidates' position adjustments in response to information about voters' preferences. Repositioning allows candidates to move closer to the median voter, but it incurs financial and electoral costs. In a subgame-perfect equilibrium, candidates diverge from the center ex ante if the costs of adjustment are sufficiently large. This allows them to increase the chances of a costless victory when the information is strongly in their favor. Our theory highlights a dynamic of moderation during the campaign stage in competitive elections, as well as a prominent role for minor adjustments made preemptively by the favored candidate. JEL Classification: C72, D72, D82 Model. We enrich the Downs-Hotelling framework by introducing an information shock, creating a two-stage game. The shock reveals the location of the median voter. This captures the idea that voters' aggregate preferences fluctuate over time and that their current leanings are disclosed during the electoral cam-This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made. Gaëtan Fournier Alberto Grillo Yevgeny Tsodikovich flip-flop, imperfect information, spatial voting, re-positioning 2025-06-04 We study how the US presidential election of 2016 affected the subsequent inflow of Mexican-born immigrants. We use the “Matricula Consular de Alta Seguridad” data to construct proxies for annual inflows and internal movements of Mexican-born individuals, including undocumented immigrants, across US commuting zones. We find that a 10-percentage point increase in the Republican vote share in a commuting zone reduced inflows by 1.8 percent after the 2016 Trump election. The internal relocation of established Mexican immigrants primarily explains this reduction, though inflows of new immigrants decreased as well. María Esther Caballero Giuseppe Ippedico Giovanni Peri 2025 As social media is increasingly popular, we examine the reputational costs of its increased centrality among academics. Analyzing posts of 98, 000 scientists on Twitter (2016–2022) reveals substantial and varied political discourse. We assess the impact of such online political expression with online experiments on a representative sample of 3, 700 U.S. respondents and 135 journalists who rate vignettes of synthetic academic profiles with varied political affiliations. Politically neutral scientists are viewed as the most credible. Strikingly, on both the ’left’ and ’right’ sides of politically neutral, there is a monotonic penalty for scientists displaying political affiliations: the stronger their posts, the less credible their profile and research are perceived, and the lower the public’s will¬ingness to read their content, especially among oppositely aligned respondents. A survey of 128 scientists shows awareness of this penalty and a consensus on avoiding political expression outside their expertise. Eleonora Alabrese Francesco Capozza Prashant Garg 2025 I analyze Dutch survey data that contains rich information on political preferences, personality traits, and socioeconomic background. I show that voting and political opinions are better predicted by personality and economic preferences than by a rich set of socioeconomic characteristics. Personality differences also explain large parts of the gender and education gaps in voting and ideology. The detailed survey data and large number of parties represented in Dutch parliament allow analysis beyond a simple left-right framework. Personality differences are particularly predictive of support for populist right-wing parties and of attitudes towards social issues, including immigration, climate change and European integration. Thomas Buser 2025-05-16 In the aftermath of globalization, Western democracies have witnessed a surge in political disaffection and radical-right support. While economic and migration shocks have been widely studied, the political effects of border liberalization remain underexplored. This paper theorizes and tests how increased border permeability can generate political discontent, even without necessarily affecting immigration or direct economic competition. We argue that open borders enable brief, routine interactions between groups across historically closed frontiers. When this occurs between regions of unequal perceived status, it can erode symbolic boundaries and foster resentment. We examine this in the context of the German--Czech border, which transformed from a militarized Cold War frontier to an internal EU border. Leveraging two moments of liberalization---the fall of the Iron Curtain (1989) and Czech EU accession (2004)---we apply difference-in-differences and event study designs using municipality-level data from Bavaria. Border liberalization led to a drop in turnout (around 2 pp) and a rise in radical-right support (around 1 pp). This findings have implications on the determinants of backlash against globalization. Maycas-Sardi, Jose Serrano-Serrat, Josep 2025-07-04 How does polarization - as measured by mistreatment of political rivals - spread? In an online experiment, participants choose between splitting financial resources equally or discriminating against a member of the opposing political party. We vary the information subjects receive about others' choices and justifications for discrimination. Exposure to extreme justifications for discrimination increases discrimination - particularly in a polarized environment, when many others are already discriminating - and it leads participants to adopt more extreme justifications themselves. Our findings suggest a self-reinforcing dynamic that may fuel polarization: Exposure to extreme statements increases polarization and the prevalence of extreme reasoning. Buschinger, Christiane Eyting, Markus Hett, Florian Kessler, Judd B. political polarization, peer effects, justifications, outgroup discrimination, social norms 2025 This paper studies how innovation reacts to foreign political risk and shapes its economic consequences. In a model with foreign political shocks that can disrupt the supply of foreign inputs, we show that greater political risk abroad increases domestic innovation, thereby lowering reliance on risky sourcing countries. We then combine data on sector-level technology development with time-varying measures of industry-level exposure to foreign political risk and report three sets of empirical findings. First, sectors and commodities with higher exposure to foreign political risk exhibit significantly greater innovative activity. This finding holds across sectors in the US, across country-sector pairs in a global sample, and across critical minerals that are essential for modern economic activity. Second, the response of innovation is particularly strong when risk emanates from geopolitical adversaries. This is consistent with our finding that trade restrictions are more likely to emerge between non-allies following a rise in political risk in either country. Third, directed innovation reduces countries’ reliance on imports from risky foreign markets. In doing so, technological change amplifies the negative effects of domestic political risk on export performance. Joel P. Flynn Antoine B. Levy Jacob Moscona Mai Wo 2025-06 Does political polarisation influence actual economic behaviours? Using British nationally representative surveys and administrative data, we document how the Brexit referendum triggered stark divergences in individual micro and macro expectations between Leave and Remain supporters. Compared to existing research, we show how these polarising effects were driven by a specific policy issue and mostly unrelated to traditional partisan identities. We also demonstrate how these diverging beliefs influenced major real financial decisions. Leavers became more likely to purchase durable goods and engage in housing transactions, and areas with higher proportions of Leave voters experienced increased housing transaction volumes and rising prices. Kuang, Pei Luca, Davide Wei, Zhiwu Political Polarisation, Brexit, Expectations, Spending Intentions, Housing Transactions 2025 Organized crime groups are known to provide electoral support to politicians, but the rewards they obtain in return remain poorly understood. We develop a theoretical framework suggesting that modern mafia support hinges on parties’ willingness to weaken anti-mafia policies, specifically by neglecting the reallocation of confiscated mafia assets. Judicial records indicate that when these assets remain unassigned, crime families can quietly repossess them, turning policy inertia into a hidden payoff. Using data from Sicilian municipalities between 1992 and 2022, we first detect vote manipulation in tightly contested majoritarian races—particularly in smaller towns—indicating strategic vote buying by the mafia. A regression discontinuity design, restricted to comparable municipalities quasi-randomly sorted around the threshold, reveals that narrowly won Forza Italia victories trigger a sharp fall in asset reallocations only within mafia controlled areas. To capture intensive-margin variation in the vote-buying deal, we exploit the mafia’s abrupt 1987 withdrawal of support from the Christian Democrats. Municipalities suffering larger DC vote losses—our proxy for historical mafia vote-buying capacity-experience steeper post-election cuts in asset reallocations, but only during Berlusconi’s governments. Instrumenting modern Forza Italia support with these historical shifts further supports a causal relation between mafia vote buying and national-level policy concessions. Alessio Carrozzo Magli Giovanni Righetto Antonio Schiavone 2025 Activists play a key role in the process of democratic transition and consolidation. How is their activism affected by democratic reforms? We study how local activism in England and Wales responded to the changes in representation introduced by the Great Reform Act of 1832. This reform reduced parliamentary representation in some areas and increased it in others. We exploit exogenous variation in which areas lost and gained representation and measure activism using the number of petitions each area sent to parliament. We find that petitioning increased in areas that gained representation, partly because of greater civil society mobilization, while petitioning fell in areas that lost representation. This shows that prodemocratic reforms can promote political activism, while anti-democratic reforms can decrease it. In the specific case of England and Wales, positive feedback between activism and reform helped make democratization a path-dependent process and the Great Reform Act its critical juncture. Aidt, T. S. Leon-Ablan, G. Activism, Petitions, Reform, Democratization, Democratic Backsliding, Representation, England, Great Reform Act 2025-06-26 Machine learning and algorithmic decision-making technology – i.e., “artificial intelligence” (AI) – is rapidly advancing and becoming more widespread at workplaces. For some individuals, this is beneficial in that it increases their productivity and generates new employment opportunities. Other individuals, however, could see their incomes and employment opportunities decline because AI takes over their work tasks or because they are insufficiently skilled to fully take advantage of AI technology in their work. Some of this is already visible and, given what is known from previous research on the implications of technological transformations, these developments are likely to affect people’s political attitudes and preferences. I investigate this empirically using novel indicators of AI exposure and AI complementarity in combination with data from multiple waves of the European Social Survey. I find that AI exposure and complementarity do indeed have meaningful effects on political attitudes and preferences (specifically demand for redistribution and support for right-wing populist parties): Increasing AI exposure, when combined with AI complementarity, significantly lowers support for redistribution and for right-wing populist parties, while high complementarity in the absence of exposure has the opposite effects. In addition, while the former effect got weaker over the last two decades, the latter became stronger. These findings add to a growing literature that shows that the “AI Revolution” is already having meaningful political effects. Knotz, Carlo Michael 2025-07-03 This paper examines how political representation for marginalized groups affects development outcomes and environmental choices by studying the adoption of clean cooking fuels under India's Pradhan Mantri Ujjwala Yojana (PMUY). Focusing on political reservations for Scheduled Tribes (STs), we assess how these institutional arrangements influence household fuel use across ecologically diverse regions. Using village-level data from the 2020 Mission Antyodaya Survey and high-resolution forest cover data, we employ a spatial regression discontinuity design (SRD) to compare LPG adoption between Scheduled Areas (administratively designated tribal-majority regions) and non-Scheduled Areas. We find that ST political reservations at the assembly constituency level are associated with a significant reduction in PMUY uptake in Scheduled Areas. To explore variation within SAs, we employ Propensity Score Matching to assess the impact of the Panchayat Extension to Scheduled Areas Act (PESA), which mandates ST representation in local governance. We find that PESA increases LPG adoption in villages located in open forest and scrubland, while it reduces uptake in regions with moderately dense forests. Additionally, our analysis reveals that higher forest cover displaces clean fuel use, and quantile regressions confirm that PESA implementation is linked to forest gains-suggesting that politically empowered ST leaders may promote conservation, inadvertently reinforcing biomass dependence. Our findings highlight a policy trade-off between environmental stewardship and the clean energy transition in ecologically sensitive tribal areas. Ghosh, Samarpita Sarkhel, Prasenjit Clean Fuel, Forest Cover, PESA, Propensity Score Matching, Scheduled Area, Spatial Regression Discontinuity 2025 Populist parties made spectacular gains between 2002 and 2022. While multiple factors can explain this, the deterioration or disappearance of public services in many rural or peripheral areas plays a significant role. This is shown by a study analyzing the relationship between the disappearance of public services and changes in voting behavior in France. Nur Bilge Etienne Farvaque Jan Fidrmuc extremist parties, Public facilities, populism, extrême gauche, service public 2025-06-15 We develop a model of strategic information provision where politicians choose how to allocate limited disclosure across multiple policy dimensions. Citizens are heterogeneous statistical learners who interpret data differently, following Liang (2021). Our key insight: spreading information thinly across many dimensions (“flooding the zone”) maximizes disagreement among citizens, preventing the coordination needed for collective accountability. We characterize equilibrium disclosure strategies and show that politicians with unfavorable private information flood to prevent investigation, while those with favorable information choose intermediate disclosure levels that balance reputation building with enabling scrutiny. The model yields both pooling equilibria that create “transparency theater”—where all politicians provide vast but shallow information—and separating equilibria where disclosure strategies reveal type. We derive threshold conditions showing that flooding dominates when investigation stakes are asymmetric, communication technology enables high dimensionality, and citizen populations are heterogeneous in their information processing. Extensions examine strategic interactions between competing politicians and the mediating role of information platforms in either amplifying or constraining flooding strategies. Joshua S. Gans 2025-06