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Leaders’ Impact on Public Spending Priorities: The Case of the German Laender

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  • Bernd Hayo

    ()
    (University of Marburg)

  • Florian Neumeier

    ()
    (University of Marburg)

Abstract

We examine determinants of the composition of public expenditure in the German Laender (states) over the period 1993–2008, as the Laender exhibit a high degree of institutional and political homogeneity and are endowed with extensive fiscal competences. Our prime contribution is an investigation into how political leaders’ socioeconomic background influences public spending priorities. Applying sociological theory, we link preferences for the composition of public spending to social status. In contrast to approaches relying on political budget cycles or partisan theory, we find strong and theory-consistent evidence that prime ministers tend to favour fiscal policies supporting the social class in which they are socialised. Governments led by prime ministers from a poor socioeconomic background spend significantly more on social security, education, health, infrastructure, and public safety.

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File URL: https://www.uni-marburg.de/fb02/makro/forschung/magkspapers/09-2012_hayo.pdf
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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201209.

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Length: 26 pages
Date of creation: 2012
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Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201209

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Keywords: Leadership; socioeconomic status; social rivalry; public expenditure composition.;

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Citations

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Cited by:
  1. Bernd Hayo & Stefan Voigt, 2012. "Explaining Constitutional Change: The Case of Judicial Independence," CESifo Working Paper Series 4032, CESifo Group Munich.
  2. Diaz-Serrano, Luis & Pérez, Jessica, 2013. "Do More Educated Leaders Raise Citizens' Education?," IZA Discussion Papers 7661, Institute for the Study of Labor (IZA).
  3. Bernd Hayo & Florian Neumeier, 2013. "Political Leaders Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries," MAGKS Papers on Economics 201308, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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