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Is there an election cycle in public employment? Separating time effects from election year effects

  • Dahlberg, Matz

    ()

    (IFAU - Institute for Labour Market Policy Evaluation)

  • Mörk, Eva

    ()

    (IFAU - Institute for Labour Market Policy Evaluation)

Do governments increase public employment in election years? This paper investigates this question by using data from Sweden and Finland, two countries that are similar in many respects but in which local elections are held at different points in time. We can thereby separate an election effect from other time effects. Our results indicate that there is a statistically significant election year effect in local public employment, a production factor that is highly visible in the welfare services provided by the local governments in the Scandinavian countries. The effect also seems to be economically significant; the municipalities employ 0.6 more full-time employees per 1,000 capita in election years than in other years (which correspond to an increase by approximately 1 percent).

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Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2008:3.

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Length: 25 pages
Date of creation: 10 Mar 2008
Date of revision:
Publication status: Published as Dahlberg, Matz and Eva Mörk, 'Is There an Election Cycle in Public Employment? Separating Time Effects from Election Year Effects' in CESifo Economic Studies, 2011, pages 480-498.
Handle: RePEc:hhs:ifauwp:2008_003
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  1. Matz Dahlberg & Eva Johansson, 2000. "An examination of the dynamic behaviour of local governments using GMM bootstrapping methods," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(4), pages 401-416.
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  8. Coelho, Cesar & Veiga, Francisco Jose & Veiga, Linda G., 2006. "Political business cycles in local employment: Evidence from Portugal," Economics Letters, Elsevier, vol. 93(1), pages 82-87, October.
  9. Ronald Kneebone & Kenneth McKenzie, 2001. "Electoral and Partisan Cycles in Fiscal Policy: An Examination of Canadian Provinces," International Tax and Public Finance, Springer, vol. 8(5), pages 753-774, November.
  10. Dahlberg, Matz & Edmark, Karin, 2008. "Is there a "race-to-the-bottom" in the setting of welfare benefit levels? Evidence from a policy intervention," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1193-1209, June.
  11. Shi, Min & Svensson, Jakob, 2002. "Conditional Political Budget Cycles," CEPR Discussion Papers 3352, C.E.P.R. Discussion Papers.
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  14. Pettersson Lidbom, Per, 2003. "A Test of the Rational Electoral-Cycle Hypothesis," Research Papers in Economics 2003:16, Stockholm University, Department of Economics.
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  21. Shi, Min & Svensson, Jakob, 2006. "Political budget cycles: Do they differ across countries and why?," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1367-1389, September.
  22. Blais, Andre & Nadeau, Richard, 1992. " The Electoral Budget Cycle," Public Choice, Springer, vol. 74(4), pages 389-403, December.
  23. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  24. Andrikopoulos, Andreas & Loizides, Ioannis & Prodromidis, Kyprianos, 2004. "Fiscal policy and political business cycles in the EU," European Journal of Political Economy, Elsevier, vol. 20(1), pages 125-152, March.
  25. Antti Moisio, 2002. "Essays on Finnish Municipal Finance and Intergovernmental Grants," Research Reports 93, Government Institute for Economic Research Finland (VATT).
  26. Baleiras, Rui Nuno & da Silva Costa, Jose, 2004. "To be or not to be in office again: an empirical test of a local political business cycle rationale," European Journal of Political Economy, Elsevier, vol. 20(3), pages 655-671, September.
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