Filip Palda

Voter Turnout: How Much Can We Explain?

This paper evaluates the ability of common explanatory variables to predict who votes. Logit voting regressions are estimated with more than three dozen explanatory variables using survey and aggregate data for the 1979, 1980, 1984, and 1988 Canadian national elections. We find that the usual demographic variables such as age and education, and contextual variables such as campaign spending have significant effects on the probability of voting, but the models have low R2s and cannot predict who votes more accurately than random guessing. We also estimate regressions using past voting behavior as a predictor of current behavior, and find that although the explanatory power rises it remains low. This suggests that the difficulty in explaining turnout arises primarily from omitted time- varying variables. In some sense, then, it appears that whether or not a person votes is to a large degree random. The evidence provides support for the rational voter theory, and is problematic for psycho/sociological approaches.

The Downsian voter meets the ecological fallacy

This paper presents evidence that voter participation does not depend on the probability that one vote is decisive. An extensive summary of the empirical participation literature is provided which shows that most but not all studies have found that turnout in an electoral district is higher when the race is closer. Individual-level vote regressions for the 1979 and 1980 Canadian national elections are estimated using objective measures of closeness (as opposed to self-reported measures). The main finding is that a citizen is no more likely to vote in a close election than in a lands-lide election. District-level turnout regressions for the same elections are also estimated, and a significant relation between closeness and turnout is observed. This suggests that aggregation bias may generate a spurious closeness-turnout relation in district-level regressions.

The impact of campaign expenditures on political competition in the French legislative elections of 1993

We use regression analysis to estimate the effect that campaign money had on the votes of challengers and incumbents in the 1993 elections to the French legislative assembly. Incumbent candidates can at best expect to win 1.01% of the popular vote for each extra franc they spend per registered voter in their district. Challengers can expect to win at least twice as much as this. Simulations show that if campaign spending ceilings were halved, incumbents would have gained an extra ten percent of the popular vote over their closest challenging rivals. The regression analysis also suggests that voters react negatively to candidates who rely heavily on their own money for their outlays and reward candidates who rely on contributions from private individuals. These results suggest that campaign spending ceilings may inhibit political competition, and that voters may resist a candidate who relies on narrow sources of funding.

Evasive Ability and the Efficiency Cost of the Underground Economy

In the presence of differing abilities to evade taxes, markets select producers for their evasive skills and their abilities to keep costs of production low. Inefficient firms crowd out efficient firms. If the least efficient firms are the best tax evaders, adverse selection is severe and output comes entirely from the high cost end of the supply curve. Tax revenue may be greater under tax evasion than without evasion if evasive ability allows government to act as a price-discriminating monopolist. When evasive and productive talents are unrelated this result disappears, but the deadweight loss due to adverse selection of firms persists and rivals the size of the traditional triangle deadweight loss.

Problems Measuring the Underground Economy in Transition

An easy and popular method for measuring the size of the underground economy is to use macro data such as money demand or electricity demand to infer what the legitimate economy needs, and then to attribute the remaining consumption to the underground economy. Such inferences rely on the stability of parameters of the money demand and electricity demand equations, or at very least on knowledge of how these parameters are changing. We argue that the pace of change of these parameters is too variable in transition economies for the above methods of estimating the size of the underground economy to be applicable. We make our point by using Czech Republic and other transition country data from the financial and electricity sectors.

Desirability and effects of campaign spending limits

This paper measures the influence of campaign spending on incumbent and challenger votes in Canadian federal elections. The goal is to assess the influence of spending ceilings on political competition and on voter welfare. It is found that in the 1984 and 1988 Canadian federal elections challengers could increase their voteshare by spending but that incumbents could not. These results are used in a simulation to show that if ceilings were lowered, incumbent voteshare would rise. On this evidence it is argued that spending ceilings may tilt the playing field in favour of incumbents and reduce political competition.

Mission Implausible III: Measuring the Informal Sector in a Transition Economy using Macro Methods

An easy and popular method for measuring the size of the underground economy is to use macro-data such as money demand or electricity demand to infer what the legitimate economy needs, and then to attribute the remaining consumption to the underground economy. Such inferences rely on the stability of parameters of the money demand and electricity demand equations, or at the very least on knowledge of how these parameters are changing. We argue that the pace of change of these parameters (such as velocity) is too variable in transition economies for the above methods of estimating the size of the underground economy to be applicable. We make our point by using the Czech Republic and other transition country data from the financial and electricity sectors.

Can repressive regimes be moderated through foreign aid

In what circumstances should foreign aid be given to less developed countries with repressive rulers? Repressive rulers are assumed to control the national income and to trade it against the probability of staying in office which is assumed in turn to depend positively on popular wealth and repression. A foreign donor aware of this process of optimization will pursue his international objectives by attaching conditions to his aid that alter the relative price of repression and popular wealth in the calculations of the tyrant. The effectiveness of direct and in-kind aid and the desirability of a “carrot an stick” aid policy depend on the direct and the interactive effects that popular wealth, repression, and the parameters of economic growth exert on the regimes stability and its level of income.

Some deadweight losses from the minimum wage: the cases of full and partial compliance

This paper highlights the social costs from non-price rationing of the labour force due to the minimum wage. By short-circuiting the ability of low reservation-wage workers to underbid high-reservation wage workers, the minimum wage interferes with the markets basic function of grouping the lowest cost workers with the highest productivity firms. The present paper models the deadweight loss that society bears when high reservation-cost workers displace low reservation-cost workers. When firms can evade part or all of the minimum wage, an extra deadweight loss arises. Firms with high evasive ability but low productivity may displace firms with low evasive ability but high productivity.

Property rights vs. redistribution: Which path to national wealth? *

Recent empirical and theoretical research suggests that egalitarian income distribution may spur economic growth. Another different strand of research suggests that property rights are important. These two results are not at odds. A model of switching between a career of rent-seeking and wealth producing shows that for redistribution to boost national income, property rights need to be secure. A more equal distribution of earned income can induce rent-seekers to switch to wealth making, but only if they can be assured that their earned income will be protected from other rent-seekers. The model suggests new directions for empirical testing.