Working Paper Series, Center for Fiscal Studies,
Uppsala University, Department of Economics

Abstract: This paper investigates the causal link between voter turnout and policy outcomes related to the size of government. Tax rate and public expenditures are the focal policy outcomes in this study. To capture the causal mechanism, Swedish and Finnish municipal data are used and a constitutional change in Sweden in 1970 is applied as an instrument for voter turnout in local elections. In 1970, Sweden moved from having separate election days for different levels of government,among other things, to a system with a single election day for political elections, thus reducing the cost associated with voting. This constitutional reform increased voter turnout in local elections in Sweden. The overall conclusion of this paper is that higher voter turnout yields higher municipal taxes and larger local public expenditures. Second,there is some evidence that higher turnout decreases the vote share for right-wing parties.

Keywords: Voter Turnout; Size of government; Sweden; Finland; Local public finance; Instrumental variable regression

JEL-codes: D70; D72; H39

48 pages, November 4, 2013

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