The Consequences of Collective Action: An Incomplete-Contracts Approach

Public policy may be determined as much by what cannot be agreed to by politicians and organized interests as by what can. Focusing on the inability of organized groups to credibly promise that their members will fully report revenues to tax authorities, I develop an incomplete-contracts lobbying model that shows that the provision of collective goods may be influenced by the anticipated tax compliance of economic sectors as well as by the organization of interests. Data from a survey of firms in Eastern Europe and the former Soviet Union are broadly supportive of the theory: the ability of firms to hide revenues from tax authorities rivals conventional collective-action variables in explaining variation in collective-goods provision, but only in that part of the postcommunist world where differences in revenue hiding across sectors are especially large.     

The Productivity Consequences of Political Turnover: Firm‐Level Evidence from Ukraine's Orange Revolution

We examine the impact of political turnover on economic performance in a setting of largely unanticipated political change and profoundly weak institutions: the 2004 Orange Revolution in Ukraine. Exploiting census‐type panel data on over 7,000 manufacturing enterprises, we find that the productivity of firms in the regions most supportive of Viktor Yushchenko increased by more than 15 percentage points in the three years following his election, relative to that in the most anti‐Yushchenko regions. We conclude that this effect is driven primarily by particularistic rather than general economic policies that disproportionately increased output among large enterprises, government suppliers, and private enterprises—three types of firms that had much to gain or lose from turnover at the national level. Our results demonstrate that political turnover in the context of weak institutions can have substantial distributional effects that are reflected in economic productivity.     

Businessman Candidates

Why and when do businessmen run for public office rather than rely upon other means of influence? What are the implications of their participation for public policy? We show formally that “businessman candidacy” and public policy are jointly determined by the institutional environment. When institutions that hold elected officials accountable to voters are strong, businessmen receive little preferential treatment and are disinclined to run for office. When such institutions are weak, businessmen can subvert policy irrespective of whether they hold office, but they may run for office to avoid the cost of lobbying elected officials. Evidence from Russian gubernatorial elections supports the model's predictions. Businessman candidates emerge in regions with low media freedom and government transparency, institutions that raise the cost of reneging on campaign promises. Among regions with weaker institutions, professional politicians crowd out businessmen when the rents from office are especially large.     

Electoral Manipulation as Bureaucratic Control

Bureaucratic compliance is often crucial for political survival, yet eliciting that compliance in weakly institutionalized environments requires that political principals convince agents that their hold on power is secure. We provide a formal model to show that electoral manipulation can help to solve this agency problem. By influencing beliefs about a ruler's hold on power, manipulation can encourage a bureaucrat to work on behalf of the ruler when he would not otherwise do so. This result holds under various common technologies of electoral manipulation. Manipulation is more likely when the bureaucrat is dependent on the ruler for his career and when the probability is high that even generally unsupportive citizens would reward bureaucratic effort. The relationship between the ruler's expected popularity and the likelihood of manipulation, in turn, depends on the technology of manipulation.     

Is Putin’s popularity real?

Vladimir Putin has managed to achieve strikingly high public approval ratings throughout his time as president and prime minister of Russia. But is his popularity real, or are respondents lying to pollsters? We conducted a series of list experiments in early 2015 to estimate support for Putin while allowing respondents to maintain ambiguity about whether they personally do so. Our estimates suggest support for Putin of approximately 80%, which is within 10 percentage points of that implied by direct questioning. We find little evidence that these estimates are positively biased due to the presence of floor effects. In contrast, our analysis of placebo experiments suggests that there may be a small negative bias due to artificial deflation. We conclude that Putin’s approval ratings largely reflect the attitudes of Russian citizens.