The effect of subsidising firms on voting behaviour: Evidence from Fremish elections
AbstractDespite an international consensus on the importance to limit State aid spending, large amounts of resources are still devoted to a wide variety of subsidies to firms. A sizable literature studies the relationship between general government spending and the proximity of elections, mostly documenting a positive link. In addition, other studies verify whether this strategy of increasing government expenditure pays off in terms of number of votes. We focus on one type of government spending that can be quite vulnerable to becoming ‘targeted spending’, i.e. subsidies to firms. We empirically test the relationship between the amount of subsidies granted to firms at the local level and local support for incumbent parties in the regional government. To that end, we make use of subsidy data derived from financial statements on 2008 and Flemish election results of 2004 and 2009. We find that the total amount of subsidies as well as subsidies per capita granted in 2008 positively correlate to support for incumbent parties 2009, meaning that voters appear to reward subsidy granting politicians.
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Bibliographic InfoArticle provided by Europa Grande in its journal European Journal of Government and Economics.
Volume (Year): 1 (2012)
Issue (Month): 1 (June)
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subsidies; voting behaviour; industrial policy;
Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
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