Direct democracy, partial decentralization and voter information: evidence from Swiss municipalities
- PDF / 2,304,562 Bytes
- 24 Pages / 439.37 x 666.142 pts Page_size
- 3 Downloads / 199 Views
Direct democracy, partial decentralization and voter information: evidence from Swiss municipalities Sergio Galletta1,2
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract In this paper, I investigate whether changes in the availability of direct democratic institutions in local jurisdictions affect the decentralization of expenditures. Using a difference-in-differences estimation on a panel of 406 Swiss municipalities, I find a statistically significant reduction in decentralization when local jurisdictions introduce mandatory fiscal referenda. To rationalize this result, I propose a model of partial decentralization in which policies are mainly influenced by politicians’ electoral incentives. As direct democracy has positive effects on citizens’ awareness of governments’ behavior, in equilibrium, expenditures will be higher at the level of government at which citizens have the least control over government actions. Keywords Direct democracy · Fiscal referendum · Partial decentralization · Vertical interaction JEL Classification H76 · H77 · D72 · D78
I wish to thank David Agrawal, Katherine Cuff, Patricia Funk, Vincenzo Galasso, Mario Jametti, Marcelin Joanis, Michael Devereux, Raphaël Parchet and Francesco Trebbi for their insightful comments and Marco Tarchini for his excellent assistantship. I have also benefited from comments from participants at the Sinergia Workshop (Lausanne), IIPF (Lugano), CPEG (Ottawa), YSEM (Zürich), EPCS (Groningen) and a seminar at the University of Barcelona. Financial support from the Swiss National Science Foundation (Grants ProDoc-130443, Sinergia-130648/147668 and Early Postdoc.Mobility-158603 ) is gratefully acknowledged. * Sergio Galletta [email protected] 1
University of Bergamo, Bergamo, Italy
2
ETH, Zürich, Switzerland
13
Vol.:(0123456789)
S. Galletta
1 Introduction The political economy literature has widely emphasized how jurisdictions that permit direct legislation produce economic outcomes that are different than those of pure representative democracies.1 Yet, few papers have assessed the effect of direct democracy on fiscal decentralization. In a theoretical contribution, Redoano and Scharf (2004) suggest that tasks are more likely to be centralized in a representative democracy. However, the only two empirical analyses undertaken to date have produced conflicting results. Feld et al. (2008) showed that Swiss cantons (states) that allow fiscal referenda experience a higher level of decentralization. Funk and Gathmann (2011) also analyze a sample of Swiss cantons, but conclude that direct democratic institutions do not affect the allocation of public expenditure between levels of government. This study contributes to the literature in two ways. First, I propose a theoretical framework that shifts the focus from the effect of direct democracy on task assignment, as in Redoano and Scharf (2004), to its impact on governments’ electoral incentives by drawing attention to the vertical interactions between governments.2 In othe
Data Loading...
