Essays on Empirical Political Economics

Aalto University publication series DOCTORAL DISSERTATIONS 171/2015 This dissertation consists of three empirical essays each focusing on a different aspect of Political behavior in Finnish municipalities. The second and the third essay utilize a novel data set, namely the voting advice application data from the municipal elections. In the first paper, I investigate whether establishing an asylum center for refugees in a municipality is associated with voting result changes. My contribution is to document political reactions at immigrants at a very early stage of an immigration process. With the caveat that the statistical power is low due to the small number of asylum centers, the tentative conclusion is that there seems to be no impact on voting shares of the anti-immigration party on the municipality level or on the sub-municipality level. The results for the pro-immigrant party are less conclusive. I do not find evidence on the heterogeneous effects related to the cultural homogeneity. In the second paper, I study whether a change in the local unemployment rate is associated with changes in candidate positioning in Finnish municipal elections. I find that when the unemployment rate is higher, politicians become more willing to prioritize employment over environmental protection, which is consistent with the existence of an environmental business cycle. The results are robust to different definitions of unemployment and are not driven by any single party. In the third paper, I investigate whether there is an incumbency effect with respect to policy positions regarding the degree of redistribution or the public sector size in an regression discontinuity design set-up. I also study if tenure makes politicians choose more moderate policy positions or approach national party position averages, general regional position averages or regional party position averages. The results suggest that being in office does not change politicians’ policy positions.