Office-holding Premia and Representative Democracy

Abstract : I show that in a representative democracy, the predominance of high-income citizens in the legislature may imply that no legislator supports the redistribution policy low-income citizens prefer. Provided redistribution is the salient policy issue, the predominance of high-income citizens cannot arise if low-income citizens still support more redistribution once in office - they must join high-income citizens in opposing it. I formalize the underlying logic using office-holding premia. High-income citizens can only predominate the legislature if high premia induce low-income citizens to oppose more redistribution once in office. Therefore, all legislators oppose more redistribution, irrespective of their income background.

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Corruption, Regulation, and Investment Incentives

Abstract : We study the optimal design of regulation for innovative activities which can have negative social repercussions. We compare two alternative regimes which may provide firms with different incentives to innovate and produce: lenient authorization and strict authorization. We find that corruption plays a critical role in the choice of the authorization regime. Corruption exacerbates the costs of using lenient authorization, under which production of socially harmful goods is always authorized. In contrast, corruption can be socially beneficial under strict authorization, since it can mitigate an over-investment problem. Hence, more pervasive corruption favors the adoption of a strict authorization regime and may increase welfare.

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How Organizational Capacity Can Improve Electoral Accountability

Abstract : The organizational structure of the bureaucracy is a key determinant of policy outcomes. Bureaucratic agencies exhibit wide variation in their organizational capacity, which allows politicians to strategically shape policy implementation. This paper examines what bureaucratic structure implies for the ability of voters to hold politicians electorally accountable. It explicitly models differences in organizational capacity across bureaucratic agencies and considers a problem where a politician must decide not only which policy to choose but which agency, or combination of agencies, will implement it. The choice of implementation feeds back into the choice of policy and this, in turn, affects how voters perceive the performance of the incumbent. This creates a chain of interdependence from agency structure to policy choice and political accountability. The formal model shows that the variation in organizational capacity serves the interests of voters by improving electoral control of politicians.

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