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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)
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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},
  keyword      = {economic outcomes,fiscal policies,local governments,regression discontinuity design},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Effect of Left-Wing Party Control on Economic Outcomes},
  year         = {2020},
}