Econometrica: May 2014, Volume 82, Issue 3

Democracy, Redistribution, and Political Participation: Evidence From Sweden 1919–1938

DOI: 10.3982/ECTA9607
p. 961-993

Björn Tyrefors Hinnerich, Per Pettersson‐Lidbom

In this paper, we compare how two different types of political regimes—direct versus representative democracy—redistribute income toward the relatively poor segments of society after the introduction of universal and equal suffrage. Swedish local governments are used as a testing ground since this setting offers a number of attractive features for a credible impact evaluation. Most importantly, we exploit the existence of a population threshold, which partly determined a local government's choice of democracy to implement a regression‐discontinuity design. The results indicate that direct democracies spend 40–60 percent less on public welfare. Our interpretation is that direct democracy may be more prone to elite capture than representative democracy since the elite's potential to exercise de facto power is likely to be greater in direct democracy after democratization.

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Supplement to "Democracy, Redistribution, and Political Participation: Evidence from Sweden 1919-1938"

In this web appendix we present the results from a number of specification checks regarding bandwidths and order of polynomial (Section A1), imposing the same slope on both sides of the RD threshold (Section A2), expressing the outcome (welfare spending per capita in logarithmic form) in levels (Section A3) and as a total (Section A4), using collapsed data (Section A5), graphical evidence of any discontinuities in pre-treatment characteristics at the threshold (Section A6), and histograms over the forcing variables (Section A7).

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Supplement to "Democracy, Redistribution, and Political Participation: Evidence from Sweden 1919-1938"

This zip files contains the replication files for the manuscript.

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