The selection of politicians in a decentralized setting: The role of political parties and elections in sub-national governments
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1 The selection of politicians in a decentralized setting: The role of political parties and elections in sub-national governments [VERY PRELIMINAR] Andrea Filippetti London School of Economics and Political Science, and National Research Council of Italy a.filippetti@lse.ac.uk Lucio Morettini National Research Council of Italy lucio.morettini@issirfa.cnr.it A weakness of democracy derives from the fact that it is ruled by numbers and not by competences (Urbinati). For this reason, mechanisms that allow to align the rule of the number with good competences are key for the functioning of democracy, and also have a substantial bearing on the functioning of the economic system (North, 2005). Since the XVIII century, political theorists like Emmanuel-Joseph Seyes have considered elections as a means of selecting the political elite. 1 The electoral mechanism plays a paramount role also in the so-called second generation theory of fiscal federalism, which has integrated the political economy framework within the theory of decentralization (Oates, 2005; Weingast, 2014). The key element of this approach is the principal-agent incentive problem that arises when citizens delegate authority to policy makers. Elections are crucial for solving the incentive problem, in that they allow citizens to: i) monitoring opportunist behaviour of politicians by reward/punish behaviour accordingly; ii) select the most competent policy makers and/or those whose motivations are most likely in tune with the public interest (Besley, 2007). The importance of elections is therefore largely recognized in the fiscal federalism theory, and in particularly that of local elections, which take place at the level that is closest to voters. 2 This paper is concerned with the role local elections for the selection of good politicians in Italy in the period In particular, we test at the effectiveness of two different process of choice in sub-national elections. The first concerns the role of the parties in selecting the candidates to the elections. The second regards the role of the citizens in selecting the best politicians, through the elections. 1 Note that today Chinese elite argues that one of the ingredient for their extraordinary success is the capacity of the Communist Party involved in a relentless effort to recruit talented people to its upper ranks (The Economist, March 1 st -7 th 2014). 2 See literature on local election as secondary order election and recent development on this on Revelli 2013.
2 It has been advocated that decentralization can be an institutional solution to the problem raised above about democracy and the selection of the representatives, since it has desirable characteristics in terms of selecting good officers (Faguet, 2014). However, this mechanism has been so far less explored, when compared for instance to the wealth of studies dealing with horizontal competition among local governments (for exceptions see Revelli, 2013). The key mechanism through which decentralization is efficient in selecting good officers is by means of increasing the political competition distributed along national and sub-national levels of governments (Faguet, 2014). Candidates can enter national politics trough different routes, as for instance trough national parties. This can raise a problem if parliamentary leaders collude to keep potential candidates out of the parliament. Faguet (2014) argues that decentralization can offer important alternative routes, such as those trough provincial and local governments. This would increase political competition and so the quality and probity of a nation s policymaking (p. 3). The possibility for local officers to advance to higher levels of government, continues Faguet (2014), will increase the role of politicians at each level of government, as well as their incentives to offer better local public services. In this paper we address a particular category of officers, which are i. in office in the lower level of sub-national governments, and ii. running for elections to move upwards to higher levels of subnational governments (we do not consider elections in central government). In this way we want to test whether sub-national elections are an effective means for selecting those good officers who are moving towards the centre of the government. Selecting good officers from a large base by means of electoral competition from below, to move upwards towards more relevant levels of governments, should represent a desirable characteristic of decentralized systems of governance. We look at two moments of the process of choice. The first is that of parties which select those running for the election - the candidates. The second is that of the elections in which the citizens chose their representatives the elected. We compare some characteristics of the officers who get candidates/elected with those of those who are not candidate/elected in a sample including over 13,894 candidates in the period in 8 sub-national elections in Italy. Two sets of characteristics are considered. The first relate to two individual characteristics of the officers: i. the level of education; ii. the type of job. The second pertain to the fiscal budget aggregates during their office, namely various measures of local expenditure and local revenues. The personal characteristics of the individual can be interpreted as a proxy of the intrinsic quality of the candidate. In turn, the trend of the fiscal budget during their office can be interpreted as a measure of the virtuosity of their behaviour in office. Data
3 To test our hypothesis we use data on Italian local administrators between 2003 and 2010, collected from the General Register Office of Local Administrators of Ministry of Internal Affairs (Anagrafe degli Amministratori Locali e Regionali del Ministero dell Interno). In Italy there exist three levels of administrative division, i.e. Municipalities, Provinces and Regions, with different competences. Each one of them has a local council, which represents the legislative body, and a giunta, i.e. the executive body of local government, that is composed by the President (major for the Municipality) and several Assessors (or vice majors). There are over 8,000 municipalities in Italy, 110 provinces and 20 regions. To test the model we consider only majors, since they have a direct control over local public spending and local taxation. Within these officers, we identify a group of majors that try to shift from the municipality to Province or Region, i.e. we select all the majors that during their mandate have been presented as candidate in local elections. For the second step we use this sub group of officers in order to compare majors that have shifted to an upper administrative level whit all the others that have failed the jump. We collect data over about 13,894 majors related to 6,825 municipalities. Out of the total sample, there are 757 majors elected in an upper administrative level and 1,056 nominated but not elected officers. Tables 1 and 2 show how these two groups of administrators are grouped for each territorial level. Table 1 shows that majors most frequently shifted from the lower level (municipal) to the next one (province). Only the 11.1% of them passed from municipality to the region. A comparison between table 1 and 2 show that the probability to be elected if nominated is higher for Province: the 43,5% of nominated for Province vs 32.1% of nominated for Region. [Table 1 about here] [Table 2 about here] Dataset is completed with information on municipal balance sheets. We use data on public expenditure and local taxes for about 6,825 municipalities over the period 2003 and 2010, collected by Openpolis Association. 3 Not all the municipalities are present in each year; table 3 shows the municipalities distribution along the time. In addition, we could not collect data for all the municipalities in Italy, which are actually around 8,000 in the considered period. However, there seem to be not specific patters that could affect the analysis, since there are municipalities lacking basically from all regions across Italy and of different size. We are confident to be able to add up the remaining municipalities soon. 3 We are extremely grateful to OpenPolis for making these data available to us. Long life to open data!
4 [Table 3 about here] Findings In this draft we present some preliminary results related to the selection of politician through the elections, i.e. the second step of the analysis described in the introduction. We are interesting in estimating the probability to be elected of a major that run for an office at local level (i.e. Province or Region) respect to individual officer s characteristics and her public policy at the lower level of government i.e. the level. of public spending. Our general model is: Where y is a dummy that indicates if the major of the municipality i is elected at time t. X is the level of local expenditure of the municipality i at time t. We look at expenditure of the AP in the years prior her change of office, since we expect she would manipulate it in an opportunistic way in order to be appointed to an upper office. C is a vector of control variables that include two personal characteristics of the politician, namely the type of job and the level of education. Similarly Z is a vector that includes some characteristics of the office. The most important is the year of office in order to control for the presence of electoral budget-cycle phenomena. We include the three years prior to the election while we use the first two as a base category. We also control for: i. the presence of other politicians in the same office (e.g. the vice major) who were appointed to a higher level of government, since they might also be encouraged to raise expenditure; and ii. the presence of vice majors who were reappointed in the same office. The third set of control variables includes the range of population of municipalities. 4 We also introduce a dummy indicating whether the majors were elected trough a ballot (or not) in order to proxy for the relative power of the major in office. It has also been argued that weather conditions can also affect turnout. For this reason we introduce a variable taking a value equal to 1 for election held during spring (the large majority), and 0 for those during autumn. We introduce province-level dummies ( ) in order to control for spatial autocorrelation, which might depend both by tax mimicking and yardstick competition phenomena, as well as other fixed effects. Finally, year dummies ( ) are introduced. Table 4 presents the results of our estimations. We presents four sets of results, first one is the estimation of our model without expenditure that we use as benchmark for the others: 4 The range of population is important not only for controlling for the size of the jurisdiction. In fact, there are a number of provisions in public finance which are different across range of population, such as for example the application of the Internal Stability Pact which is a measure for controlling expenses which applies only to jurisdictions below 5,000 inhabitants.
5 the election is positively correlated with some kind of jobs (manger, intellectual professions, employee or worker in commerce and service), while is most difficult to be elected if the officer has a low degree of education or is in the last two years of its mandate. These results ha substantially confirmed in the other three estimations but we can note that also expenditure has a positive influence on election probabilities. In particular we can notice that current expenditure has a larger effect respect to capital expenditure and this result seems to suggest that there is the possibility that majors use public expenditure as a tool for their electoral targets. These are just preliminary results but they seem to suggest that our hypothesis deserve further analysis. [Table 4 about here]
6 Tables Table 1 Majors that shift office upward To From Province Region Total Municipality Table 2 Majors nominated but not elected To From Province Region Total Municipality ,056 Table 3 - Municipalities included in the dataset over the years Year N of Municipalities , , , , , , , ,420
7 Table 4 basic total capital current total expenditure 0.293*** (6.02) capital expenditure 0.105*** (3.04) current expenditure 0.327*** (6.66) Job: Manager or Intellectual profession 0.938** 0.861* 0.911** 0.897* (2.05) (1.87) (1.99) (1.93) Job: employee, worker in commerce or services 0.970** 0.896* 0.945** 0.937** (2.10) (1.93) (2.04) (2.00) Job: qualified worker (1.53) (1.51) (1.54) (1.59) Job: other job 0.865* 0.791* 0.847* 0.834* (1.83) (1.66) (1.79) (1.74) No education *** *** *** *** (-3.11) (-3.26) (-3.15) (-3.13) Compulsory school ** * ** * (-1.97) (-1.84) (-1.97) (-1.81) High school (1.33) (1.42) (1.29) (1.50) 5th office year *** *** *** *** (-4.85) (-5.20) (-5.04) (-5.19) 4th office year *** *** *** *** (-3.42) (-3.70) (-3.44) (-3.83) 3th office year * * ** (-1.61) (-1.91) (-1.68) (-1.99) Constant *** *** *** *** (-3.28) (-6.71) (-4.55) (-7.11) Population dummies included included included included Province dummies included included included included Year Dummies included included included included Observations t statistics in parentheses * p<0.10, ** p<0.05, *** p<0.01
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