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Electoral systems and fiscal policy outcomes: Evidence from Poland

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  • Kantorowicz, Jarosław

Abstract

This article studies the causal effect of electoral systems on fiscal outcomes using an empirical design exploiting a discontinuity in the application of electoral rules in Polish municipalities in the period 2002–2014. In that period, municipalities followed either majoritarian or proportional (PR) systems, depending on the population size. The article provides evidence that the PR system results in smaller municipalities’ own revenue, larger intergovernmental transfers and, consequently, greater vertical fiscal imbalance. It is demonstrated that the reduction in own revenue under the PR system is arguably driven by lower accountability of policy-makers, which leads to lower effort of policy-makers in stimulating local labour markets and entrepreneurship. An increase in intergovernmental grants, in turn, can be explained by a larger share of incumbents affiliated with national political parties.

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  • Kantorowicz, Jarosław, 2017. "Electoral systems and fiscal policy outcomes: Evidence from Poland," European Journal of Political Economy, Elsevier, vol. 47(C), pages 36-60.
  • Handle: RePEc:eee:poleco:v:47:y:2017:i:c:p:36-60
    DOI: 10.1016/j.ejpoleco.2016.12.004
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    2. Kantorowicz, Jarosław & Köppl–Turyna, Monika, 2019. "Disentangling the fiscal effects of local constitutions," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 63-87.
    3. Lim, Jamus Jerome, 2020. "The political economy of fiscal procyclicality," European Journal of Political Economy, Elsevier, vol. 65(C).
    4. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2018. "Employment protection, temporary contracts and firm-provided training: Evidence from Italy," Working Papers 2018-02, Joint Research Centre, European Commission (Ispra site).
    5. Kantorowicz, Jarosław & Köppl-Turyna, Monika, 2020. "Electoral systems and female representation in politics: Evidence from a regression discontinuity," Working Papers 20, Agenda Austria.

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