Notes on contributors

This article investigates the political impact of the introduction of state subsidies to political parties. The arguments for and against subsidising political parties are outlined. Different models of party subsidies, and their regulatory frameworks, are discussed. We find little evidence of a cross‐national impact of the introduction of party subsidies. The subsidies cannot explain the decline in party membership. Nor is there evidence to suggest that the subsidies were introduced as a response to membership decline. There is no support for the allegation that party subsidies lead to the petrification of party systems. The subsidies have not meant that other income sources have lost their significance for political parties.     

Subsidized housing,housing prices,and the living arrangements of unmarried mothers

Abstract

Although many studies estimate the effects of welfare benefits on mothers’ living arrangements, housing subsidies and prices are rarely the focus. This article uses a new longitudinal birth cohort study, the Fragile Families and Child Wellbeing Study, to examine the relationship between subsidized housing, housing prices, and the living arrangements of unmarried mothers three years after a nonmarital birth.

Results suggest that the availability of subsidized housing is negatively associated with marriage relative to living alone. Eligibility criteria and means testing in subsidized housing may make marriage a costly choice. Housing prices are positively associated with marriage, cohabitation, and living with family members relative to living alone. Economies of scale may be particularly important for single‐earner households when housing prices increase. Failure to control for housing costs and subsidies leads to underestimates of the effects of welfare and unemployment rates on the living arrangements of unmarried mothers.     

Taxes, Subsidies, and Listeners Like You: Public Policy and Contributions to Public Radio

Public radio in the United States receives both direct and indirect government funding. Direct subsidies come in the form of lump-sum and matching grants, while indirect subsidies proceed from tax revenues forgone on tax-deductible private donations. Each of these sources of government money affects charitable giving to public radio. This article estimates both of these effects, using data on 91 public radio stations in the United States during 1995. Data analysis shows that public funding to stations has a positive impact on private giving, but this impact rapidly decreases as the level of government subsidies increases. The analysis also indicates that increases in state tax rates correspond with significantly higher donation levels. This article explores the implications of these and other findings for policy makers, public administrators, and nonprofit managers.     

Public attitudes toward economic conditions and their impact on government behavior

This article reviews extant studies of the impact of economic conditions on government electoral behavior in the Western democracies. Three conclusions are reached: (1) in representative democracies there exists a consistent relationship between the economic situation and citizen evaluation of government; (2) the proposition that governments are interested in achieving their selfish goals in elections fares well compared with the competing proposition that governments are interested in the state of the economy as such; and (3) governments and voters are not the only actors in politico-economic decisions: bureaucracies and interest groups may make government incapable of changing its policies quickly in the face of stiff resistance from this multitude of other actors. Their inclusion in relevant models is a necessary next step in research designed to understand better the functioning of modern democratic societies.This paper was written while the author was at GSIA, Carnegie-Mellon University.     

Does Family‐Friendly Policy Matter? Testing Its Impact on Turnover and Performance

This study investigates the relative effects of four types of family‐friendly policies—child care subsidies, paid leave for family care, telework, and alternative work schedules—on turnover rates and effectiveness in federal agencies. Contemporary social exchange theory predicts that an agency’s average level of satisfaction with a specific family‐friendly policy is negatively associated with turnover in the agency but positively associated with overall performance. This analysis differs from common expectations. Only child care subsidies show a positive, significant influence on reducing turnover. Child care subsidies and alternative work schedules reflect positive and significant influences on agency effectiveness. Ironically, an agency’s average satisfaction with telework arrangements proves to be a significant but negative effect on performance.     

Is a Computer Worth a Thousand Books? Internet Access and the Changing Role of Public Libraries

The ongoing debate on the “digital divide” is centered on improving Internet home‐access penetration rates through two instruments, price subsidies and capital subsidies. Subsidizing home access can be expensive and difficult because of the inherent difficulty of identifying target households. Increasing the availability of public access terminals instead can be an effective way for achieving universal access. The analysis of this article considers public libraries because of their national reach and existing Internet service offerings to users. It finds strong evidence of a need‐based use of access facilities at these libraries, and also identifies a clear increasing trend in visits over time by patrons for getting online. Upgrading and maintaining these facilities would be a better use of funds than indiscriminately providing subsidies to households.     

Macroeconomic Policy and Government Popularity in Norway 1963–1986*

Following the mainstream modelling of ‘politico-economic interaction’, the author reviews the major analyses of the Scandinavian countries. Noting that empirical findings diverge, both for the reaction function and the popularity function, the article estimates these relations on Norwegian data. For the popularity function, the analysis suggests that rates of inflation have a weak, but statistically significant impact on the popularity of governments. For the recent non-socialist governments, the analysis suggests greater impact of unemployment and real wage growth as well. The results for the reaction function support the mainstream notion that declining rates of inflation and increasing unemployment tend to cause more expansionary government policies. The estimated equations do not support the proposition that the election cycle or governments position on the opinion polls influences economic decision-making. Finally, the findings are discussed in the light of traditional normative positions     

Strikes are more common in countries with majoritarian electoral systems

Strikes are more common in those OECD countries where the legislature is elected in single member districts (SMD) than in those where it is elected by proportional representation (PR). Furthermore, more working days are lost due to industrial conflict in countries with SMD. I suggest a politico-economic explanation for these rarely noticed empirical regularities. Further empirical testing – including controls drawn from previous strike research – reveals that they hold up in a variety of econometric specifications.     

Subsidizing the affluent: the case of medical education.

State and federal funds are important sources of revenue for medical schools, and a strong case can be made for public support for these institutions. Although the federal role is more widely known, the states in fact provide the bulk of direct support for medical training. The nature of aid from the two sources differs in significant ways. Most federal aid supports research or patient care, but much of state aid goes to support unconditional tuition subsidies. The primary beneficiaries of these subsidies are relatively affluent nonminority students who are beginning lucrative careers in the medical field--careers that would be lucrative even if no subsidies were provided. Nor does it appear that general subsidies are needed to attract poor and minority applicants. While targeted loans and scholarships to individuals may be justified, general tuition subsidies are not.     

The price of nationalism: Evidence from the Soviet Union

This paper investigates the effect of implicit subsidies from the Russian Republic to other republics within the former Soviet Union on voting behavior in the All-Union Referendum of March 1991. These subsidies comprised the difference between interrepublic trade balances at domestic and world prices. A model of voting behavior incorporating effects of ethnic composition and subsidies on voting yields the estimating equation. Regression results suggest voters are influenced more by economics (subsidies) than by politics (ethnicity), although ethnicity was an important determinant of republican cooperation with Soviet authorities. Analysis of estimation results suggests the level of implicit subsidies required to increase support for the Soviet regime from 60% to 75% would have equaled 10% of the Russian republic's GDP.     

Policy Networks,Elections, and State Subsidies1

What are the effects of electoral competition on the disbursement of state subsidies in industrialized democracies? I argue that the scope of subsidies, which ranges from economy‐wide to regional and industry‐specific subsidies, is determined by the extent of political (electoral) monopoly conditioned by economic threats from foreign competition. The mechanism through which electoral competition is linked to subsidies is the policy network. I assess this argument by examining thirteen Organization for Economic Cooperation and Development (OECD) countries in the period 1990–1993. The findings offer amendments to models of policy networks and speak to the importance of domestic institutions on factor mobility and trade policy.     

Hitting a moving target: income-related health insurance subsidies for the uninsured.

New government health insurance programs are likely to emphasize voluntary purchases in a market setting, with subsidies targeted at low-income populations and stress on managed care. Such programs are best structured with a guaranteed enrollment period that is as long as six months to a year. However, given that incomes change over time, errors will be made in awarding income-related subsidies for that long. These errors are assessed in simulations undertaken with longitudinal data from the Survey of Income and Program Participation. Two allocations of the subsidies, based on current income at the beginning of the enrollment period and on actual income assessed at the end, are compared for a variety of program designs. Prospective determination of subsidies is somewhat biased toward overpayment. Net overpayments amount to 5-10 percent of subsidy costs. However, prospective payment encourages participation in the subsidy program. The simulated participation rate for true eligibles is as high as 73 percent with prospective subsidies, compared to 69 percent with retrospective reconciliation. Net overpayments are slightly reduced by testing income less frequently and over longer periods.     

On the limits to rent-seeking waste

The general equilibrium framework developed in this paper for analyzing the limits to rent-seeking waste goes beyond the existing literature by incorporating tax-financed, public subsidies and rent-protecting activities into a rent-seeking environment. We show that the limits to rent-seeking waste depend on the extent to which government subsidizes rent seekers and rent defenders through tax-financed grants, contracts and favors. As observed by Tullock (1967), the diversion of resources toward efforts to acquire a monopoly rent causes a social waste in addition to the excess burden of monopoly pricing measured by the Harberger triangle. In the absence of government subsidies to rent-seeking and under competitive conditions, this additional waste cannot exceed the maximum monopoly rent attainable. However, if government subsidizes expenditures on rent-seeking, then the additional waste can exceed the Tullock rectangle of monopoly rent and, in the limit, equal the economy's maximum potential social surplus.Rent avoidance expenditures reduce the rent to be captured and thus discourage rent-seeking. If rent avoidance is a relatively efficient mechanism for transferring consumer surplus to rent granters, then rent-seeking expenditures are displaced by less wasteful expenditures on rent defending. As a result, under competitive conditions, unsubsidized demand for private rent protection may be socially efficient. Nonetheless, the upper limit to rent-seeking waste depends on constitutionally determined maximum rates of public subsidies to rent-seeking and rent-avoidance activities.     

The Bush Administration's Proposal for Credit Reform: Background, Analysis, and Policy Issues

Large recent and forecasted federal outlays to cover losses on deposit insurance and federally-assisted credit have increased concern in the executive and legislative branches about potential future liabilities of the federal government. These potential liabilities include federal credit; consequently, this renewed interest in federal credit reform. Credit reform would have to change the budgetary treatment of federal direct loans and federal guaranteed loans. Currently, the unified budget measures the cost of federal credit on a cash flow basis. Critics (including the Bush Administration) maintain that the appropriate budgetary measure of the costs of federal credit is the present value of the subsidies to credit recipients in the fiscal year that the credit is advanced. The Bush Administration's proposal for credit reform is presented in most detail in the Federal Credit Reform Act of 1989 (the Act), which was proposed but not enacted. The Act would have had federal officials estimate credit subsidies based on the equivalent interest rates in private credit markets. These subsidies would have been used to measure the budgetary cost of federal credit and would have required annual appropriations. Two credit revolving funds would have been established in the Treasury to finance credit flows. Many of these credit reform practices were included in the Omnibus Budget Reconciliation Act of 1990 though.     

Party subsidies and the freezing of party competition: Do cartel mechanisms work?

The number of countries offering public subsidies to political parties has vastly increased in recent decades, but there have been few attempts to assess how these subsidies affect political competition. Expectations about their likely impact vary widely. Some have described subsidies as key devices used by so-called ‘cartel parties’ to buttress their status and exclude new challengers. Others see subsidies as incentives that encourage new party formation and sustain fledgling parties that otherwise might disappear. The research reported here investigates the circumstances under which subsidies seem more likely to play one or the other of these roles by considering the development of party systems and party subsidies in European democracies. It finds little evidence that subsidies freeze out new parties, but there are signs that certain schemes may encourage party fragmentation.     

Incentives,challenges, and dilemmas of TANF: A case study

This paper compares the incentives inherent in TANF (Temporary Assistance for Needy Families), the U.S. welfare system in place after the 1996 reforms, with those of TANF's predecessor, AFDC (Aid to Families with Dependent Children), using the experience in one state, Wisconsin, as an example. Is the new program successful in avoiding the “poverty trap” of the old welfare system, in which the marginal tax rates imposed on earnings and benefits were so high that they discouraged work effort outside a narrow earnings range? As women receiving assistance begin working more hours and earning more, income‐conditioned benefits (Food Stamps, EITC, Medicaid, and subsidies for child care) are reduced and withdrawn, in effect constituting a “tax” on earnings. Under TANF, there is more support for these families, at least in Wisconsin, and so economic well‐being should be higher for most women with earning in this range than it was under AFDC. But marginal tax rates under TANF remain high, and in some income ranges they are higher than under AFDC. Once in the work force, former TANF recipients have earnings over the long run that expose them to very high marginal tax rates, which decrease the benefits of working harder and make it very difficult to gain full eonomic independence. Evidence from other sources suggest that most low‐skilled women have earnings in the same range and so are likely to face similar reductions in benefits such as child care subsidies or the EITC as their earnings increase, even if they are not receiving welfare‐related benefits. © 2002 by the Association for Public Policy Analysis and Management.     

Quality of Life,Transportation Costs,and Federal Housing Assistance: Leveling the Playing Field

Abstract

Federal housing subsidies are allocated without regard to spatial differences in the cost of living or quality of life. In this article, we calculate housing subsidy payments for participants in the Housing Choice Voucher (HCV) program and demonstrate that these subsidies are significantly related to metropolitan quality-of-life differentials. We then estimate amenity-adjusted subsidies and compare these estimates with data from the U.S. Department of Housing and Urban Development’s Location Affordability Portal. Our analysis yields three insights regarding the relationship between federal housing assistance payments (HAP), metropolitan quality-of-life differentials, and transportation cost burdens. First, HCV HAP show a strong inverse correlation with household transportation expenditures, and this is particularly pronounced for low-income households. Thus, HAP do not address location affordability because those living in high-transportation cost metropolitan areas receive the lowest housing subsidies. Second, we present evidence that HAP are positively related to metropolitan quality-of-life differentials. This suggests that high-amenity metropolitan areas also tend to be the most affordable from a transportation cost perspective. Third, our proposed amenity-adjusted HAP strongly reduce the inverse relationship between HAP and transportation cost burdens.     

Macro-economic decision-making in Norway: an analysis of economic decisions within the politico-economic framework

Summary. The aim of the study is to analyze when and why Norwegian governments carry out expansive decisions rather than contractive ones. Following the politico-economic approach, it is proposed that both the governmental re-election prospects and economic indicators may influence macro-economic decision making.
The article attempts to employ this framework in an empirical analysis of events data, i.e. in an analysis of 318 decision events spread throughout the period from 1964 to 1984. Unemployment is the major determinant of macro-economic policies. The hypothesis of political business-cycle receives only limited empirical support, and there is little reliable evidence of socialist governments responding differently to economic and political factors compared to borgeois governments.     

Neoliberalism and the alcohol industry in Ireland

This paper sheds light on the development of the Irish alcohol industry and its regulation since the 1980s by situating it within the politico-economic context of neoliberalism at the national, European and global scales. First, a conceptualisation of neoliberalism is presented and the alcohol industry is related to it. Second, the connections between neoliberalism, the drinks industry and alcohol legislation are explained and illustrated at the three spatial scales mentioned above, emphasising the following components of neoliberalism: deregulation, liberalisation, commodification, free trade agreements and transnational capital flows. The paper provides a theoretical template for future research.     

Insurance Subsidies,the Affordable Care Act,and Financial Stability

This paper measures the effects of subsidies in the Affordable Care Act on adverse financial outcomes using administrative tax data and credit data on financial outcomes. Using a difference-in-differences design with propensity score reweighting, I find that at $100 per capita, ACA premium tax credits and cost-sharing reduction subsidies reduced consumer bankruptcies and severe auto delinquency by 8 percent and 7 percent, respectively, and substantially reduced right-tail delinquent debt and third-party collections. The value of recipients’ risk protection against medical debt payments amounts to approximately 16 to 21 percent of the cash costs of the subsidies, while the subsidies provided substantial indirect transfers to external parties.