Essays in Political Economy

This dissertation consists of two main chapters studying different topics in politicaleconomy with a specific focus on interactions between citizens and their government.

Political economists have long been puzzled that growing levels of inequality inthe U.S. have had little effect on income redistribution, especially when compared to European countries that have adopted more redistributive economic systems. The lack of electoral support for greater income redistribution goes against the predictions of the fundamental median-voter theorem in political science. My work contributes to a large body of work in preference for redistribution literature by studying the role of private economic benefits on individual voting decisions. Using new causal machine learning methods with the Survey of Income and Program Participation, I identify structural differences in the provision of welfare benefits between Republican and Democrat presidents for various demographic groups. Combining these estimates with voting data from the General Social Survey, I can identify how people vote with respect to their private economic benefits. The results in this chapter support the idea that economic benefits positively affect individuals’ probability of voting for a particular candidate.

In another question, I study the interaction between citizens and a political leader.A government led by the political leader implements a policy, and the outcome of the policy is uncertain. There is a number of reasons why the policy outcome can be uncertain. It can be due to the impossibility of conducting a meticulous study or an experiment. Also, it can be caused by the misalignment of incentives which is inherent in policy-making (e.g., lower-level officials are not accountable to the electorate in the same way the leader is). Although the policy to be implemented is common knowledge, neither citizens nor the leader can predict its outcome due to a lack of expertise. Once a policy is implemented, citizens, not the leader, directly observe its outcome. I show that a leader driven by a desire to get reelected can impose wasteful signaling on citizens (interpreted as protests to replace a biased official or bad outcomes).