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The political economy of local government in Croatia: winning coalitions, corruption, and taxes

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  • Vuk Vukovic

    (University of Oxford, Department of Politics and International Relations, Oxford, United Kingdom)

Abstract

This paper represents the first comprehensive effort to provide a theoretical and empirical explanation of systemic corruption in Croatian local government. It follows the logic of the selectorate theory, according to which staying in power for long periods of time depends on creating a small group of loyal but powerful supporters (the winning coalition). Mayors that exist within such environments not only maximize their chances of staying in power; they also engage in greater corruption and set higher taxes. Its citizens are stuck in a negative spiral of corruption, high taxes, and a politician that regardless of this keeps winning elections. The paper makes two main contributions to the current literature. First it provides a theoretical extension of the selectorate theory to Croatian local government by explicitly modeling the link between corruption and winning coalitions, and second, it empirically verifies the theoretical findings using a novel matching approach called entropy balancing.

Suggested Citation

  • Vuk Vukovic, 2017. "The political economy of local government in Croatia: winning coalitions, corruption, and taxes," Public Sector Economics, Institute of Public Finance, vol. 41(4), pages 387-420.
    • Handle: RePEc:ipf:psejou:v:41:y:2017:i:4:p:387-420
    DOI: 10.3326/pse.41.4.1
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    References listed on IDEAS

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    Cited by:

    1. Pasovic Edin & Efendic Adnan S., 2018. "Informal Economy in Bosnia and Herzegovina – An Empirical Investigation," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 112-125, December.

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    More about this item

    Keywords

    political economy; winning coalition; selectorate theory; corruption; taxes;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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