How Do Electoral Systems Affect Fiscal Policy? Evidence From Cantonal Parliaments, 1890-2000

Abstract

Using a new data set on Swiss cantons since 1890, we analyze how the adoption of proportional representation affects fiscal policy. In line with economic theory, we show that proportional systems shift spending toward broad goods (like education and welfare benefits) but decrease spending on geographically targetable goods (like roads). We find little evidence that proportional representation increases the overall size of government. An analysis of the underlying theoretical mechanisms reveals that proportional representation increases electoral turnout, left‐wing representation, and political fragmentation. These changes in political representation explain a substantial share of the rise in education spending, but a small share of the rise in welfare spending or the decline in road expenditures.

Do Institutions Affect Citizens' Selection Into Politics?

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Electoral Rules and Public Spending Composition: The Case of Italian Regions

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Emerging Lessons from Half a Century of Fiscal Federalism in Switzerland

“…Switzerland's fiscal federalism offers the ideal laboratory to empirically study how details of the electoral system influence electoral outcomes because electoral institutions in this small country vary across space and varied over time. Patricia Funk and Christina Gathmann (2013) seized this opportunity to study how the shift from majoritarian to proportional representation in cantonal parliaments shaped the level and composition of public spending.…”