Quarterly Journal of Political Science > Vol 14 > Issue 3

The Economic Effects of Electoral Rules: Evidence from Unemployment Benefits

Vincenzo Galasso, Bocconi University, IGIER and CEPR, Italy, vincenzo.galasso@unibocconi.it , Salvatore Nunnari, Bocconi University, IGIER and CEPR, Italy, salvatore.nunnari@unibocconi.it
Suggested Citation
Vincenzo Galasso and Salvatore Nunnari (2019), "The Economic Effects of Electoral Rules: Evidence from Unemployment Benefits", Quarterly Journal of Political Science: Vol. 14: No. 3, pp 259-291. http://dx.doi.org/10.1561/100.00018104

Publication Date: 15 Jul 2019
© 2019 V. Galasso and S. Nunnari
Elections,  Comparative politics,  Political economy
Electoral rulesunemployment benefitsswing districts


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In this article:
Proportional System 
Majoritarian System 
Comparing Majoritarian and Proportional Systems 
The Empirical Analysis 


This paper provides a novel test of the link from electoral rules to economic policies. We focus on unemployment benefits because their classification as a broad or targeted transfer may vary — over time and across countries — according to the geographical dispersion of unemployed citizens, the main beneficiaries of the program. A simple theoretical model delivers unambiguous predictions on the interaction between electoral institutions and the unemployment rate in contestable and safe districts. Due to electoral incentives, the difference in the unemployment generosity between majoritarian and proportional systems depends on the difference in the unemployment rate between contestable and safe districts. We test this prediction using a novel dataset with information on electoral competitiveness and unemployment rates at district level, and different measures of unemployment benefit generosity for 16 OECD countries between 1980 and 2011. The empirical analysis strongly supports the theoretical predictions.