We study the role of takeover threats as a corporate control mechanism using [Aghion, P., Tirole, J., 1997. Formal and real authority in organizations. Journal of Political Economy 105, 1–29] model of formal and real authority. Shareholders do not monitor the manager’s actions since ownership is widely dispersed. A corporate raider may monitor and step in if a profit opportunity exists. In our ...

We examine the effect of rainfall shocks on crimes against women using data from 583 Indian districts for 2002-2007. We find that a one standard deviation decline in annual rainfall from the local mean increases reported domestic violence by 4.4 percent and dowry deaths by 7.8 percent. Wet shocks have no apparent effect. These patterns are consistent with consumption smoothing by households rel...

This paper incorporates two-stage education in a political economy model to study the endogenous determination of public budget allocation across education stages. With hierarchical education, individuals’ benefits from higher education depend on their qualifications, and congestion arises when higher enrollment lowers schooling quality. In less developed economies, the top class has dominant p...

Theories of political redistribution are tested using data collected in three phases of the International Social Survey Programme. Individuals categorized as having high, middle, or low incomes were asked whether they consider the overall tax burden in their countries too high, too low or about right. Very few citizens indicated that they were satisfied with tax systems; most believed that taxe...

Diversity is often thought to create conflict and harm economic institutions. We hypothesize, however, that the impact of diversity is conditional on political institutions, and may be negative in some settings but positive in others, due to differences in the nature of rent seeking in different regimes. To test this hypothesis, we estimate the impact of diversity on economic freedom, condition...

We examine the incentives for countries to go to war as they depend on the comparison of how much their pivotal decision-makers have at risk compared to how much they stand to gain from a war. How this ratio compares to the country at large is what we term “political bias”. If there is no political bias (a case that we loosely relate to a “pure democracy”), then there are always payments that o...

This paper tries to explain the declining level of public investment in OECD countries by taking account of political and economic driving forces. The theoretical framework hints to the relevance of a number of demand and supply factors – ranging from the yield of public investment to institutions like the EU deficit limits of the Stability and Growth Pact. The econometric results indicate that...

We decompose distributional preferences into fair-mindedness (weight on oneself vs. others) and equality-efficiency tradeoffs, and measure both at the individual level in a large and diverse sample of Americans. We find considerable heterogeneity in both the extent of fairmindedness and willingness to trade off equality and efficiency, much of which cannot be explained by standard socioeconomic...

The goals of democratic competition are not only to give implement a majority's preference on policy questions, but also to provide a deterrent against corrupt abuse of power by political leaders. We consider a simple model of multicandidate elections in which different electoral systems can be compared according to these two criteria. Among a wide class of singlewinner scoring rules, only appr...

This paper studies how a politician’s preferences and abilities to influence public and private sector productivity affect her choices over economic policies. Extremism between policies of leftand right-wing incumbents increases with ability, because voters are more willing to re-elect competent politicians. Positive correlations between certain ability dimensions and preferences amplify politi...