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The Effect of Left-Wing Party Control on Economic Outcomes

Sandberg, David LU (2020) NEKN01 20201
Department of Economics
Abstract
A common belief is that left-wing parties tend to use their influence to expand the public sector by increasing taxes – but is this belief supported by data? This study aims to find the causal effect of having left-wing majority and left-wing rule on a set of economic and policy outcomes by using panel data of Swedish local governments between 1995 and 2018. A regression discontinuity design is applied to exploit the discontinuous party control change at 50 percent of the vote share making left-wing majority as good as randomly assigned to observations close to the threshold. The findings suggest that left-wing party control has a negative effect on income inequality and intergovernmental grants and a positive effect on employment and... (More)
A common belief is that left-wing parties tend to use their influence to expand the public sector by increasing taxes – but is this belief supported by data? This study aims to find the causal effect of having left-wing majority and left-wing rule on a set of economic and policy outcomes by using panel data of Swedish local governments between 1995 and 2018. A regression discontinuity design is applied to exploit the discontinuous party control change at 50 percent of the vote share making left-wing majority as good as randomly assigned to observations close to the threshold. The findings suggest that left-wing party control has a negative effect on income inequality and intergovernmental grants and a positive effect on employment and income tax rate where one part of the employment increase stems from public sector expansion. (Less)
Please use this url to cite or link to this publication:
author
Sandberg, David LU
supervisor
organization
course
NEKN01 20201
year
type
H1 - Master's Degree (One Year)
subject
keywords
economic outcomes, fiscal policies, local governments, regression discontinuity design
language
English
id
9025081
date added to LUP
2020-08-29 10:37:10
date last changed
2020-08-29 10:37:10
@misc{9025081,
  abstract     = {{A common belief is that left-wing parties tend to use their influence to expand the public sector by increasing taxes – but is this belief supported by data? This study aims to find the causal effect of having left-wing majority and left-wing rule on a set of economic and policy outcomes by using panel data of Swedish local governments between 1995 and 2018. A regression discontinuity design is applied to exploit the discontinuous party control change at 50 percent of the vote share making left-wing majority as good as randomly assigned to observations close to the threshold. The findings suggest that left-wing party control has a negative effect on income inequality and intergovernmental grants and a positive effect on employment and income tax rate where one part of the employment increase stems from public sector expansion.}},
  author       = {{Sandberg, David}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Effect of Left-Wing Party Control on Economic Outcomes}},
  year         = {{2020}},
}