candidate reputations and the incumbency effect abstract a major shortcoming of the classical median voter model is that its central prediction convergence of platforms to the median voter s ideal is seldom observed one reason is that the classical model neglects the importance of voter expectations as a determinant of votes here we associate voters expectations about candidates with past as well as current candidate pronouncements and assume that incumbents whose actions are consistent with their reputations are perceived as less risky than challengers in equilibrium candidates choose distinct platforms typically neither adopts the median voter s ideal point either candidate may win depending on how well the incumbent s reputation reflects current voter tastes and how relatively risky the electorate perceives the challenger to be

a theory of voting equilibria a voting equilibrium arises when the voters in an electorate acting in accordance with both their preferences for the candidates and their perceptions of the relative chances of various pairs of candidates being in contention for victory generate an election result that justifies their perceptions voting equilibria always exist and the set of equilibria can vary substantially with the choice of voting system we compare equilibria under the plurality rule approval voting and the borda system we consider a candidate positioning game and find that the plurality rule imposes little restriction on the position of the winning candidate in three candidate races while approval voting leads to a winner positioned at the median of the voter distribution we contrast campaign activities intended to influence voter preferences with activities meant to influence only perceptions of candidate viability

unemployment insurance and the rate of re employment of displaced workers the rate of transition from unemployment to re employment for a sample of displaced workers is estimated using a semiparametric specification which allows the effects of unemployment insurance benefits to vary over time three results which would be missed by more restrictive specifications demonstrate the value of this approach 1 the effects of ui benefits decline and eventually disappear as the date of expiration approaches 2 expiration of ui benefits are an inadequate explanation of the spikes commonly observed in nonparametric sample hazard rates for re employment 3 ui benefits do not significantly affect the rate at which a displaced worker becomes re employed in his or her previous industry but reduce the rate for transitions to other industries copyright 1991 by mit press

political competition between differentiated candidates abstract we introduce a framework of electoral competition in which voters have general preferences over candidates immutable characteristics such as gender race or previously committed policy positions as well as their policy positions which are flexible candidates are uncertain about the distribution of voter preferences and choose policy positions to maximize their winning probability we characterize a property of voter utility functions uniform candidate ranking ucr that captures a form of separability between fixed characteristics and policy when voters have ucr preferences candidates equilibrium policies converge in any strict equilibrium in contrast notions like competence or complementarity lead to non ucr preferences and policy divergence in particular we introduce a new class of models that contains the probabilistic voting model as a special case and in which there is a unique equilibrium that generically features policy divergence

explaining the transitions out of unemployment in spain the effect of unemployment insurance a multinomial logit model and matched files from the spanish active population survey epa are used to study transitions out of unemployment among men aged 20 59 in addition to demographic characteristics other explanatory variables included in the regressions pertain to previous job characteristics and the spell of unemployment in this article special attention is paid to the impact of unemployment insurance benefits on the re employment probability consistent with previous work it is found that receipt of unemployment insurance is associated with lower probabilities of re employment and of withdrawal from the labour force more importantly a differential effect of benefit receipt is obtained when comparing time periods before and after 1992 indeed in april of that year the labour authority made eligibility requirements for unemployment insurance more restrictive and curtailed benefit amounts

spatial equilibrium with entry this paper examines spatial equilibrium in political competition when established parties choose their platforms competitively while rationally anticipating entry of a vote maximizing third party the resulting equilibrium is substantially different from the hotelling median equilibrium established parties are spatially separated and third parties will generally lose the election this provides one theoretical explanation for the stability of two party systems namely that non cooperative behavior between established parties can effectively prevent third parties from winning

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

budget windows sunsets and fiscal control abstract in recent years the united states has evaluated policy changes using a multi year budget window a budget window that is too short permits the shifting of costs beyond the window s endpoint while a window that is too long includes years for which current legislation is essentially meaningless and allows the shifting of fiscal burdens to those whom budget rules are supposed to protect this paper characterizes the optimal budget window an appropriately designed budget window eliminates the incentive to use sunsets to avoid budget restrictions the analysis also has implications for how to account for long term term budget commitments

extremism campaigning and ambiguity this paper studies a model of how political parties use resources for campaigning to inform voters each party has a predetermined ideology drawn from some distribution parties choose a platform and campaign to inform voters about the platform we find that the farther away parties are from each other on average the less resources are spent on campaigning on average thus if parties are extreme less information is supplied than if parties are moderate we also show that if a public subsidy is introduced we have policy convergence given some mild technical restrictions on the public subsidy

elections coalitions and legislative outcomes predictions of electoral behavior in a multiparty setting should be a function of the voters beliefs about how parties will perform following an election similarly party behavior in a legislature should be a function of electoral promises and rewards we develop a multistage game theoretic model of three party competition under proportional representation the final policy outcome of the game is generated by a noncooperative bargaining game between the parties in the elected legislature this game is essentially defined by the vote shares each party receives in the general election and the parties electoral policy positions at the electoral stage parties and voters are strategic in that they take account of the legislative implications of any electoral outcome we solve for equilibrium electoral positions by the parties and final policy outcomes

campaign contributions as valence i study how the possibility of voters contributing to candidates in response to the candidates policy proposals affects the equilibrium policy in winner take all political competition more specifically i allow each partisan voter to contribute to her preferred candidate where the amount contributed depends on the relative positions of the two candidates candidates then use the donations to build valence through campaigning which in turn affects the voting decision of impressionable voters since candidates are concerned with raising money as well as picking a policy position preferred by the median voter i show that campaign contributions may lead to divergent equilibria in winner take all elections when politicians are policy motivated albeit only under stylized utility functions and donor densities further under symmetric voter and donor densities if either the donor density is single peaked or the voter utility is concave a unique equilibrium exists in which both candidates propose the ideal policy of the median voter

the impact of the potential duration of unemployment benefits on the duration of unemployment abstract this paper examines the impact of the potential duration of unemployment insurance ui benefits on unemployment in the united states first we use a large sample of household heads to examine differences in the unemployment spell distributions of ui recipients and nonrecipients sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for ui recipients around the time of benefits exhaustion such increases are not apparent at similar points of spell duration for nonrecipients second our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of ui recipients by 0 16 to 0 20 weeks

sequential location games we study location games where market entry is costly and occurs sequentially and where consumers are nonuniformly distributed over the unit interval we show that for certain classes of densities including monotone and under some additional restrictions hump shaped and u shaped ones equilibrium locations can be determined independently of when they are occupied our analysis reveals a number of peculiarities of the uniform distribution extensions of the model allow for price competition and advertisement in media markets winner take all competition trade offs between profits in the short and the long run and firms operating multiple outlets

an overlapping generations model of electoral competition this paper presents a dynamic model of political competition between two parties with different policy preferences a party is explicitly modeled as a sequence of overlapping generations of candidates all of whom face finite decision horizons in general there is a conflict between the interests of the individual policymakers and those of the party which includes subsequent generations of candidates we characterize this conflict and suggest a scheme of intergenerational transfers within the party which can resolve or mitigate this conflict the paper shows how the overlapping generations model can be usefully applied to the political arena this abstract was borrowed from another version of this item

plurality and runoff systems and numbers of candidates although political scientists have in the last few decades learned much about the abstract properties of multicandidate electoral systems we have accumulated little theoretical knowledge on the ways in which strategic behavior of voters and candidates changes when we move from one voting system to another this essay has illustrated how the relative desirability of voting systems can change when the number of candidates usually considered fixed in such comparisons is taken as endogenous to the voting system in force at the time our main conclusion is therefore that the method of voting must be understood in relation to the total electoral system it is not enough to analyze properties of voting systems in the abstract but also in terms of the interactions that voting systems have with political groups and the constitutional setting

optimal nonlinear income taxation with learning by doing abstract this paper examines a two period model of optimal nonlinear income taxation with learning by doing in which second period wages are an increasing function of first period labour supply we consider the cases when the government can and cannot commit to its second period tax policy in both cases the canonical mirrlees stiglitz results regarding optimal marginal tax rates generally no longer apply in particular if the government cannot commit and each consumer s skill type is revealed it is optimal to distort the high skill type s labour supply downwards through a positive marginal tax rate to relax an incentive compatibility constraint our analysis therefore identifies a setting in which a positive marginal tax rate on the highest skill individual can be justified despite its depressing effect on both labour supply and wages

credibility and policy convergence in a two party system with rational voters the traditional approach to modeling political parties behavior based upon the contribution of anthony downs 1957 assumes that the parties unique objective is to win elections thus they maximize their popularity the crucial implication of this assumption for a two party system is that if the two parties have the same information about voters preferences full convergence of policies results from electoral competition this is the crucial implication of the median voter theorem more generally it may be argued that different parties are motivated differently because they represent different constituencies parties may not care only about winning elections per se but also about the quality of the policies resulting from an election in this case the candidates of the two parties view winning an election not only as a goal per se but also as a means of implementing a better policy for their respective constituencies this paper shows that electoral competitions imply dynamic inconsistency if the voters are modeled as rational and forwardlooking agents and parties do not care exclusively about being elected but also about which policy to implement once elected the dynamic inconsistency arises as follows the parties have an incentive to announce convergent platforms to increase their chances of election however if the elected party is not committed to its electoral platform it has an incentive to follow its most preferred policy rather than the policy announced in its platform if voters are rational they account for this incentive thus in general in a one shot electoral game the only timeconsistent equilibrium is one in which no convergence is possible the two parties follow their most preferred policies and the voters rationally expect this outcome full convergence of parties platforms results only as a limiting case when the parties are completely indifferent with respect to the quality of the policies resulting from the election thus these results differ from the existing literature on ideologically motivated politicians for instance donald wittman 1977 1983 randall calvert 1985 which implicitly assumes the possibility of binding commitments to electoral platforms complete or partial policy convergence can be the outcome of political competition if the interaction between the parties and the voters is modeled as an infinitely repeated game in fact if the candidates have concave objective functions the welfare maximizing policy rule implies a complete convergence of parties policies however this cooperative and agreed upon policy may or may not be sustainable as a subgame perfect equilibrium depending on parameter values in particular it depends on the discount rates of the two parties the degree of polarization of their preferences and the relative popu graduate school of industrial administration carnegie mellon university pittsburgh pa 15213 and national bureau of economic research cambridge ma 02138 this paper is based upon a chapter of my unpublished doctoral dissertation at harvard university i am greatly indebted to jeffrey sachs for directing my attention toward these issues and for many conversations i also wish to thank andrew abel dilip abreu olivier blanchard ramon caminal andrew caplin alex cukierman morris fiorina benjamin friedman herschel grossman howard rosenthal and the referees for very useful comments the responsibilitv af anv n mtnkieis af calrirp nfnlv mine the result of policy convergence in a two party system is more general than the median voter theorem for discussions of convergence results not at the median see john ledyard 1984 peter coughlin 1984 coughlin and shmuel nitzan 1981 melvin hinich 1977 for earlier work on spatial competition see richard mckelvey 1975 hinich ledyard and peter ordeshook 1972 1973 and the references quoted therein the present paper focuses on the result of convergence rather than on the median voter theorem per se

a model of political equilibrium in a representative democracy abstract this paper studies political equilibrium in a two party representative democracy in which the political parties are policy motivated and voters trade off their policy preferences against their party identity it is shown that the parties will in general adopt differing policy positions in equilibrium and that under certain qualifications the winning policy will lie between the more popular party s preferred policy and a certain utilitarian optimum the winning policy will be closer to this utilitarian optimum the less biased the electorate is in terms of party identification

majority rule and election models abstract this paper surveys the theoretical work that has been done on majority rule and economic models of elections section i provides an overview of the topic section 2 reviews the most important results that have been obtained about majority rule as an abstract collective choice rule section 3 identifies some alternative inferences that can be made from those results section 4 covers some models that include additional features that are present in political institutions where majority rule is used section 5 concentrates on some alternative election models and equilibrium concepts section 6 focuses on election models with abstentions and or candidate uncertainty about voter behaviour section 7 compares and contrasts models where candidates are certain about what the voters choices will be contingent upon about the choices made by the candidates and models where they are uncertain about those choices section 8 closes the survey by identifying some emerging areas of research

the recall and new job search of laid off workers a bivariate proportional hazard model with unobserved heterogeneity workers who lose their jobs can become re employed either by being recalled to their previous employers or by finding new jobs workers chances for recall should influence their job search strategies so the rates of exit from unemployment by these two routes should be directly related we solve a job search model to establish in theory a negative relationship between the recall and new job hazard rates we look for evidence in the psid by estimating a semi parametric competing risks model with explicitly related hazards we find only a small negative behavioral relationship between recall and new job hazard rates

living standards and incentives in transition the implications of ui exhaustion in hungary the single most likely way to leave the unemployment insurance ui register in hungary is not by getting a job but by exhausting entitlement to benefit two questions follow first what are the implications of the cessation of ui for living standards second does ui exhaustion have much effect on the probability of getting a job through increasing incentives to work we investigate these issues with a survey of persons exhausting entitlement to ui in summer 1995 paying special attention to the household circumstances of the unemployed and to the probabilities of claiming and being awarded means tested assistance benefit

a positive theory of fiscal deficits and government debt this paper considers an economy in which policymakers with different preferences alternate in office as a result of elections government debt is used strategically by each policymaker to influence the choices of his successors if different policymakers disagree about the desired composition of government spending between two public goods the economy exhibits a deficits bias that is debt accumulation is higher than it would be with a social planner the equilibrium level of debt is larger the larger is the degree of polarization between alternating governments and the less likely it is that the current government will be re elected

structurally dependent competing risks abstract in this paper we specify and estimate a structurally dependent competing risks model for the transitions out of unemployment into either new job or recall the recall probability is allowed to affect the search intensity for new jobs

how does the benefit effect vary as unemployment spells lengthen summary this paper investigates how the effect of income while unemployed on the probability of an individual leaving unemployment varies with the length of time that the individual has been unemployed we examine this question in the context of a variety of alternative econometric models we extend the proportional hazards model with unrestricted baseline hazard to one in which there are unrestricted effects of a subset of the explanatory variables and also consider models that can be estimated as series of binary response models the proportional hazard restrictions are rejected for the sample of british unemployed men analysed and in the binary sequence framework logit and probit models based on symmetric distributions dominate in likelihood terms the extreme value form model implied by extension of the proportional hazards formulation logit models with a flexible form for the duration dependence which also incorporate unobserved heterogeneity in a flexible way are estimated the results for all formulations indicate a rapidly declining effect of unemployment income as a spell lengthens with no significant effect for the long term unemployed the preferred specifications which allow for omitted heterogeneity indicate no significant effect after about 5 months and this result is robust to the inclusion or exclusion of previous labour market experience variables and to the choice of mixing distribution

incumbent performance and electoral control in the pure theory of electoral competition citizens compare the platforms of the candidates and vote for the one whose platform is preferred candidate strategies are identified with promises about future performance in office models of this sort have been developed in both static mckelvey 1975 and dynamic kramer 1977 i settings and all appear to have the property that if the set of alternatives is large enough in some sense equilibrium platforms rarely exist but these models have another feature that is quite as disturbing as their instability in the static setting discussed by mckelvey little attention is paid to the possibility that once in office the politician s preferences may diverge from those of his constituents and that he may therefore choose policies at variance from his platform instead it is simply assumed that promises will be kept whether or not such behavior is congruent with the interest of the officeholder it is sometimes argued that an enforcement mechanism may exist to discipline politicians for failing to keep promises but without a specification of the mechanism it is not obvious that it would be in the interests of the

temporary layoff unemployment in austria empirical evidence from administrative data temporary layoffs rehires recalls have been widely recognized as an important feature of north america s labour markets for europe however several observers have suggested that tighter regulatory impediments to the recruitment and dismissal of employees are responsible for temporary layoff unemployment being virtually non existent against this background this paper uses administrative data to evaluate the quantitative importance of temporary separations among the unemployed in austria and to track its composition by industries the main finding of our empirical analysis is that about one third of all unemployment spells in austria in 1985 ended with the individual returning to the former employer since temporary layoff unemployment was found to be on average of shoter duration it comprised a somewhat lower fraction of total weeks of unemployment however temporary layoff unemployment thus accounts for the same proportion of unemployment in austria as in the us or canada

the politics of ambiguity politicians face a trade off between the policies that maximize their chances of reelection and their most preferred policies or the policies most preferred by the constituency which they represent this paper analyzes this trade off in a dynamic electoral model in which the voters are not fully informed about the preferences of the incumbent first we show that the incumbent follows a policy which is intermediate between the other party s ideal policy and his own ideal policy second we show that often the incumbent has an incentive to choose procedures which make it difficult for voters to pinpoint his preferences with absolute precision thus politicians may prefer to be ambiguous

why a stubborn conservative would run a deficit policy with time inconsistent preferences a conservative government in favor of a low level of public consumption knows that it will be replaced by a government in favor of a larger level of public consumption we show that the resulting level of public consumption is in between the levels the two governments would choose if each were in power both in the present and in the future in particular we show that if the conservative government is more stubborn in a particular sense than the succeeding government the conservative government will borrow more than it would had it remained in power in the future

the spike at benefit exhaustion leaving the unemployment system or starting a new job in this paper we review the literature on the spike in unemployment exit rates around benefit exhaustion and present new evidence based on administrative data for a large sample of job losers in austria we find that the way unemployment spells are measured has a large effect on the magnitude of the spike at exhaustion both in existing studies and in our austrian data spikes are typically much smaller when spell length is defined by the time to next job than when it is defined by the time spent on the unemployment system in austria the exit rate from registered unemployment rises by over 200 at the expiration of benefits while the hazard rate of re employment rises by only 20 the difference between the two measures arises because many individuals leave the unemployment register immediately after their benefits expire without returning to work the modest spike in re employment rates implies that most job seekers do not wait until their ui benefits are exhausted to return to work fewer than 1 of jobless spells have an ending date that is manipulated to coincide with the expiration of ui benefits this abstract was borrowed from another version of this item

negative voters electoral competition with loss aversion this paper studies how voter loss aversion affects electoral competition in a downsian setting assuming that the voters reference point is the status quo we show that loss aversion has a number of effects first for some values of the status quo there is policy rigidity both parties choose platforms equal to the status quo regardless of other parameters second there is a moderation effect when there is policy rigidity the equilibrium policy outcome is closer to the moderate voters ideal point than in the absence of loss aversion in a dynamic extension of the model we consider how parties strategically manipulate the status quo to their advantage and we find that this increases policy rigidity finally we show that with loss aversion incumbents adjust less than challengers to changes in voter preferences the underlying force is that the status quo works to the advantage of the incumbent this prediction of asymmetric adjustment is new and we test it using elections to us state legislatures the results are as predicted incumbent parties respond less to shocks in the preferences of the median voter

job search and the duration of layoff unemployment this paper derives an optimal job searching strategy for workers on layoff and an optimal recall policy for firms when each side anticipates the other side s actions correctly it shows that workers search for an alternative job only if the probability of recall falls below a critical level and that firms may recall before the recovery of demand depending on the costs of laying off and hiring workers and the probability of losing workers on layoff through the use of optimal job searching and recall policies the paper derives expressions for the duration of layoff unemployment and discusses briefly their comparative static properties

a model of electoral competition with incomplete information a model of two candidate electoral competition is developed in which voters are uncertain about the policy either candidate would implement if elected candidates simultaneously announce policy positions from which voters attempt to infer the true positions the candidates would adopt announcing a position different from the true position is costly to the winning candidate with these costs increasing as the difference between the true policy and the announced policy increases a refinement of the sequential equilibrium concept is used to describe the behavior of candidates and voters

voter participation and strategic uncertainty the paradox of not voting is examined in a model where voters have uncertainty about the preferences and costs of other voters in game theoretic models of voter participation under complete information equilibrium outcomes can have substantial turnout even when voting costs are relatively high in contrast when uncertainty about preferences and costs is present only voters with negligible or negative net voting costs participate when the electorate is large

flexible parametric estimation of duration and competing risk models in this paper we specify and estimate a flexible parametric proportional hazards model the model specification is flexibly parametric in the sense that the baseline hazard is non parametric while the effect of the covariates takes a particular functional form we also add parametric heterogeneity to the underlying hazard model specification we specify a flexible parametric proportional competing risks model which permits unrestricted correlation among the risks unemployment duration data are then analysed using the flexible parametric duration and competing risks specifications we find an important effect arising from the exhaustion of unemployment insurance and significantly different hazards for the two types of risks new jobs and recalls

electoral competition with strategic voters a recent literature has found a positive relationship between the disproportionality of the electoral system and the convergence of parties positions such a relationship depends crucially on the assumption that voting is sincere we show that when voters are players in the game and not simply automata that vote for their favorite party two policy motivated parties always take extreme positions in equilibrium

strategic voting equilibria under the single nontransferable vote previous investigations of strategic voting equilibria in mass electorates have looked only at single member districts i shall investigate such equilibria in multimember districts operating under the single nontransferable vote system what appear to be the most natural equilibria conform to the m 1 rule according to which strategic voting in m seat districts produces exactly m 1 vote getting candidates in equilibrium any others having their support totally undercut this result provides the beginnings of a formal underpinning for reed s recent extension of duverger s law to the japanese case the model also generates specific and empirically testable hypotheses concerning the exceptions to the m 1 rule that one ought to expect in equilibrium i test these hypotheses with japanese data finally the model also reveals a type of strategic voting that is specific to multimember districts i use japanese data again to explore the empirical importance of this kind of strategic voting

how changes in financial incentives affect the duration of unemployment this paper studies how changes in the two key parameters of unemployment insurance the benefit replacement rate rr and the potential benefit duration pbd affect the duration of unemployment to identify such an effect we exploit a policy change introduced in 1989 by the austrian government which affected various unemployed workers differently a first group experienced an increase in rr a second group experienced an extension of pbd a third group experienced both a higher rr and a longer pbd and a fourth group experienced no change in the policy parameters we find that unemployed workers react to the disincentives by an increase in unemployment duration and our empirical results are consistent with the predictions of job search theory we use our parameter estimates to split up the total costs to unemployment insurance funds into costs due to changes in the unemployment insurance system with unchanged behaviour and costs due to behavioural responses of unemployed workers our results indicate that costs due to behavioural responses are substantial

hiding information in electoral competition abstract we model a two candidate electoral competition in which there is uncertainty about a policy relevant state of the world the candidates receive private signals about the true state which are imperfectly correlated we study whether the candidates are able to credibly communicate their information to voters through their choice of policy platforms our results show that the fact that private information is dispersed between the candidates creates a strong incentive for them to bias their messages toward the electorate s prior information transmission becomes more difficult the less correlated are the candidates signals the lower is the signals quality and the stronger is the electorate s prior indeed for weak priors welfare decreases as the prior becomes stronger and welfare always decreases as the signals become less correlated

electoral rule disproportionality and platform polarization despite common perception existing theoretical literature lacks a complete for mal argument regarding the relationship between the electoral rule disproportionality and platform polarization in this paper we build a model that incorporates the disproportionality of the electoral system in a standard downsian electoral competition setup with mainly but not necessarily purely policy motivated parties we first show that in equilibrium platform polarization is decreasing in the level of the electoral rule disproportionality we then argue that the number of parties has a positive effect on platform polarization when polarization is measured by the distance between the two most distant platforms this effect does not hold when polarization is measured by the widely used dalton index constructing a dataset covering more than 300 elections our main theoretical findings are empirically supported pointing towards the electoral rule disproportionality as a major determinant of polarization

differences in unemployment duration a regional or a personal problem 1988 differences in unemployment duration a regional or a personal problem applied economics vol 20 no 9 pp 1233 1251

temporary layoffs and split population models this paper develops and estimates a split population model for the duration of temporary layoffs in the german labour market the population being split according to whether a layoff is temporary or permanent a flexible piecewise constant hazard is employed and the recall propensity is used to condition the duration of a temporary layoff the distinction between factors that influence the recall propensity and factors that influence the duration of a temporary layoff is shown to be of empirical significance the results of the paper are used to evaluate implicit contract and search theories of temporary layoffs the paper suggests that implicit contracts can explain the behaviour of unemployed workers with high worker firm attachment whilst search can explain the behaviour of workers with low worker firm attachment copyright 2004 john wiley sons ltd

do voters affect or elect policies evidence from the u s house there are two fundamentally different views of the role of elections in policy formation in one view voters can affect candidates policy choices competition for votes induces politicians to move toward the center in this view elections have the effect of bringing about some degree of policy compromise in the alternative view voters merely elect policies politicians cannot make credible promises to moderate their policies and elections are merely a means to decide which one of two opposing policy views will be implemented we assess which of these contrasting perspectives is more empirically relevant for the u s house focusing on elections decided by a narrow margin allows us to generate quasi experimental estimates of the impact of a randomized change in electoral strength on subsequent representatives roll call voting records we find that voters merely elect policies the degree of electoral strength has no effect on a legislator s voting behavior for example a large exogenous increase in electoral strength for the democratic party in a district does not result in shifting both parties nominees to the left politicians inability to credibly commit to a compromise appears to dominate any competition induced convergence in policy

re employment probabilities of unemployment benefit recipients this article studies transitions out of unemployment for benefit recipients in spain we analyse the duration of unemployment distinguishing between spells that end in recall workers returning to the previous employer and spells that end in exit to a new job this distinction allows us to find that the recall hazard rate increases around the time of exhaustion of benefits however this happens only for workers receiving unemployment insurance ui because we are unable to replicate this result for workers receiving unemployment assistance ua we believe the finding lends support to the hypothesis that in spain firms and workers make a strategic use of ui

multiyear budgets and fiscal performance panel data evidence abstract in the last two decades more than 120 countries have adopted a multiyear budget process medium term framework or mtf that enables the central government to set multiyear fiscal targets this paper analyzes a newly collected dataset of worldwide mtf adoptions during 1990 2008 it exploits within country variation in adoption in a dynamic panel framework to estimate mtfs impacts on aggregate as well as sectoral measures of fiscal performance we find that on average multiyear budgeting improves budget balance by about 2 percentage points with more advanced mtf phases having a larger impact higher phase mtfs also reduce health spending volatility while only the top phase mtf has a measurable impact on health sector technical efficiency

rational voting and candidate entry under plurality rule we analyze a formal model of electoral competition under plurality rule that is characterized by two novel features first rather than assuming a fixed field of candidates we allow candidates to make decisions regarding entry as well as location second voters in our model are strategically rational that is they maximize utility over expected policy outcomes rather than simply voting for the ideologically closest candidate given these assumptions all equilibria in this model are such that the set of entrants locates at the median voter s ideal point this result stands in sharp contrast to earlier models of multicandidate competition in which entry is not allowed and voters vote sincerely

on the theory of strategic voting many analyses of plurality rule elections predict the complete coor dination of strategic voting and hence support for only two candidates here i suggest that stable multi candidate support will arise in equilibrium a group of voters must partially coordinate behind one of two challenging candidates in order to dislodge a disliked incumbent in a departure from existing models the popular support for each challenger is uncertain this support must be inferred from the private observation of informative signals such as the social communication of pref erences throughout the electorate or the imperfect observation of opinion polls the uniquely stable voting equilibrium entails only limited strategic voting and hence incomplete coordination this is due to the surprising presence of negative feed back an increase in the degree of strategic voting by others reduces the incentives for an individual to vote strategically the incentive to vote strategically is lower in relatively marginal elections after controlling for the distance from contention of a trailing preferred challenger a calibration of the model applied to the uk general election of 1997 is consistent with the impact of strategic voting and the reported accuracy of voters understanding of the electoral situation it suggests that nearly 50 seats may have been lost by the conservative party due to strategic voting 1 plurality rule elections and strategic voting 1 1 strategic voting and duverger s law plurality rule elections where the winner is the candidate who receives the largest number of votes are vulnerable to strategic voting a voter might well switch away from her preferred candidate and toward a perceived leader in the hope of exerting a greater influence over the outcome of the election this phenomenon has long been the focus of both economic and political scientific study in an influential essay riker 1982b cited droop s 1871 eloquent exposition of the strategic voting problem 1 i oer my grateful thanks to the many friends colleagues seminar participants referees and editors who have oered insightful comments during the long gestation of this paper its antecedents and companion work special thanks go to steve fisher whose empirical analysis of strategic voting raised many of the questions that i seek to answer in this paper and to chris wallace this particular paper brings together much of the analysis previously circulated in the papers a new theory of strategic voting strategic voting under the qualified majority rule and idiosyncrasy information and the impact of strategic voting

a new look at the ui effect on transitions from unemployment into wage employment in spain the limited duration of the ui benefits entitlement this article is a new look at the study of the unemployment insurance effect on the transition probability from unemployment into wage employment in spain it is found that individuals increase their search effort and reduce their reservation wage as the unemployment insurance benefit entitlement exhaustion approaches and their exit rate equals that of the unemployed who never got benefits from the exhaustion moment financial constraints are not important in spain business cycle affects more to long term unemployed and finally it is found that the probability of being offered a vacancy decreases with time spent in unemployment having allowed for unobservable heterogeneity

spatial models of political competition under plurality rule a survey of some explanations of the number of candidates and the positions they take this paper surveys work that uses spatial models of political competition to explain the number of candidates and the positions that they take in plurality rule elections

mandatory versus discretionary spending the status quo eect do mandatory spending programs such as medicare improve eciency we analyze a model with two parties allocating a xed budget to a public good and private transfers each period over an innite horizon we compare two institutions that dier in whether public good spending is discretionary or mandatory we model mandatory spending as an endogenous status quo since it is enacted by law and remains in eect until changed mandatory programs result in higher public good spending furthermore they ex ante pareto dominate discretionary programs when parties are patient persistence of power is low and polarization is low

candidates credibility and re election incentives i study elections between citizen candidates who cannot make binding policy commitments before taking office but who are accountable to voters due to the possibility of re election in each period a representative voter chooses among heterogeneous candidates with known policy preferences the elected candidate chooses the policy to implement and how much rent seeking to engage in when in office as the voter decides both which candidate to elect and subsequently whether the candidate is retained this framework integrates elements of electoral competition and electoral accountability i show that in the best stationary equilibrium when utility functions are concave over policy non median candidates are elected over candidates with policy preferences more closely aligned with the voter in this equilibrium there are two candidates who are elected at some history and the policies these candidates implement in office do not converge this divergence incentivizes candidates to engage in less rent seeking increasing voter welfare copyright 2013 oxford university press

district complexity as an advantage in congressional elections scholars of congressional elections have argued that an increase in constituent diversity increases the level of electoral competition following models of boundedly rational candidates we argue that there is strong reason to believe that the opposite is true as the complexity of the electoral landscape increases challengers will have a more difficult time locating an optimal platform when facing an experienced incumbent using data from the 2000 national annenberg election study we construct a novel measure of district complexity for u s house districts and test whether the entry of quality challengers and the incumbent s share of the two party vote are affected by the complexity of the electoral landscape we find strong support for the hypothesis that complexity benefits incumbents for both indicators of electoral competition which stands in contrast to most of the existing literature on diversity and incumbent performance

voting competitions with interested politicians platforms do not converge to the preferences of the median voter we examine equilibrium voting strategies for elections with interested politicians facing uncertainty about voter preferences if politicians utilities are defined over the set of strategies that voters select instead of being dependent only on the probability of winning an election equilibrium strategies will diverge instead of converging to the median voter s preferences as long as politicians have different preferences we present conditions i for political compromise and ii for politicians with different utility functions to merge into parties with complete strategic agreement

reviews of the 2006 economic report of the president the u s tax system in international perspective a review of the 2006 economic report of the president s tax chapter 1 alan j auerbach university of california berkeley and nber april 12 2006 what can you say about a tax reform proposal that died this was the challenge facing the writers of the chapter on taxation for the 2006 economic report of the president hereafter erp one year ago the erp included a chapter entitled options for tax reform that began with the section heading why do we need tax reform and proceeded to lay out the available options that it suggested could make the u s tax system simpler more equitable and efficient in making the case for tax reform that chapter set the stage for the impending work of the president s advisory panel on tax reform while being careful to leave the president s options open until the panel reported the 2005 chapter twice included the phrase the president has not endorsed any specific proposal and this chapter does not advocate the adoption of any particular prototype for reform in case the reader didn t get the message the first two times the chapter concluded with a reminder that the president has not endorsed any specific proposal 2 that was then in november 2005 the tax reform panel issued its report so one might have anticipated a follow up chapter in this year s erp evaluating the panel s i am grateful to rosanne altshuler bill gale kevin hassett and joel slemrod for comments on an earlier draft slemrod 2005 provides a critical evaluation of the 2005 chapter

the principle of minimum differentiation revisited return of the median voter we study a linear location model hotelling 1929 in which n with n 2 boundedly rational players follow noisy myopic best reply behavior we show through numerical and mathematical analysis that such players spend almost all the time clustered together near the center re establishing the principle of minimum differentiation that had been discredited by equilibrium analyses thus our analysis of the best response dynamics shows that when considering market dynamics as well as their policy and welfare implications it may be important to look beyond equilibrium analyses

third parties in equilibrium under standard assumptions equilibria with three parties normally do not exist in spatial models of electoral competition in this paper i show that such equilibria are possible if it is assumed that voters are uncertain about the exact policies parties will adopt once elected substantive predictions can be derived from the model explaining some features of three party competition first the least risk party will always take the most moderate position second this position is also winning third the two riskier parties are always on opposite sides of the median voter and also of the moderate party

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

how shortening the potential duration of unemployment benefits affects the duration of unemployment evidence from a natural experiment in this article we investigate the disincentive effects of shortening the potential duration of unemployment insurance ui benefits we identify these disincentive effects by exploiting changes in slovenia s unemployment insurance system a natural experiment that involved substantial reductions in the potential duration of benefits for four groups of workers plus no change in benefits for another group which served as a natural control we find that the change had a positive effect on the exit rate from unemployment to new jobs and other options for unemployment spells of various lengths and for several categories of unemployed workers