New working paper: Ideology and Public Policies : A Quasi-Experimental Test of the Hypothesis that Left-Wing Governments Spend More

A new working paper of the Condorcet Center is avalaible HERE. Authors:

  • Benoît LE MAUX – CREM-CNRS, Condorcet Center for Political Economy, France
  • Kristýna DOSTÁLOVÁ – University of Rennes 1, CREM-CNRS, France
  • Fabio PADOVANO – CREM-CNRS, Condorcet Center for Political Economy, France

ABSTRACT: In the literature it is often argued that governments on the left tend to raise tax rates and public spending more than their right-wing counterparts. We demonstrate that this result must be interpreted with caution. Not only it may reveal partisan effects, due to the direct impact of parties’ ideology on public spending, but also a selection bias, since the distribution of voters’ preferences determines the ideology of the government in office. The present research overcomes this problem of observational equivalence by applying two identification strategies, namely re-gression discontinuity design and propensity score matching. Using data from the French local public sector, we show that governments facing the same economic situation do not spend more when they are left-wing, particularly in the case of social expenditures. This result rules out the partisan-politicians hypothesis and lends support to demand driven policy selection processes.