Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 628: Political Polarization and the Size of Government

Erik Lindqvist () and Robert Östling ()
Additional contact information
Erik Lindqvist: Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Robert Östling: Institute for International Economic Studies, Stockholm University, Postal: SE-106 91 , Stockholm, Sweden

Abstract: We study the effect of political polarization on public spending using the dispersion of self-reported political preferences as our measure of polarization. Political polarization is strongly associated with smaller government in democratic countries, but there is no relationship between polarization and the size of government in undemocratic countries. The results are robust to a large set of control variables, including GDP per capita and income inequality.

Keywords: Political polarization; social cohesion; size of government; redistribution

JEL-codes: H10; H20; H41

47 pages, First version: May 19, 2006. Revised: August 18, 2009. Earlier revisions: July 2, 2007, July 2, 2007, May 7, 2008, May 7, 2008, June 12, 2008, June 12, 2008, June 12, 2008, June 12, 2008, October 10, 2008, October 10, 2008, August 18, 2009.

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