Andrea Tesei
Total Page:16
File Type:pdf, Size:1020Kb
“THESIS23” — 2012/6/15 — 8:58 — page i — #1 Three Essays in Applied Economics Andrea Tesei TESI DOCTORAL UPF / ANY 2012 DIRECTOR DE LA TESI Antonio Ciccone, Departament of Economics and Business “THESIS23” — 2012/6/15 — 8:58 — page ii — #2 “THESIS23” — 2012/6/15 — 8:58 — page iii — #3 A Zu e Za iii “THESIS23” — 2012/6/15 — 8:58 — page iv — #4 “THESIS23” — 2012/6/15 — 8:58 — page v — #5 Acknowledgments In the first place, I would like to thank Antonio Ciccone for his continuous support and guidance throughout all stages of my thesis. During these years his recom- mendations have dramatically improved the quality of my work. Most impor- tantly, he was for me an example to follow: his rare combination of expertise and humanity was a true gift. I owe many thanks to Nicola Gennaioli, Marta Reynal-Querol and Joachim Voth for several enriching discussions. Their comments and suggestions often made me think twice about my initial intuition. Re-thinking was always better than thinking. Many other people at Pompeu Fabra and CREI have helped me during these years. A very incomplete list includes Paula Bustos, Gabrielle Fack, Albrecht Glitz, Stephan Litschig, Humberto Llavador, Giacomo Ponzetto, Kurt Schmid- heiny and Jaume Ventura. I also wish to thank my coauthors, Francesco Caselli, Paolo Pinotti and Ruben Durante for sharing with me part of their knowledge on the natural resource curse and on the importance of mass media in politics. My understanding of such rele- vant topics has greatly improved thanks to them. Virginie Solelhac taught me the beauty of game theory and helped me make it through the prelims exam. I wouldn’t be writing these acknowledgments if it were not for her help. The much admired Catalan efficiency was personified by Marta Araque and Laura Agust´ı, who always took care of all real-life administrative obstacles, help- ing me win the battle against bureaucracy. During these years, I was lucky enough to meet several colleagues that pro- gressively turned into good friends. Teo, Filo, Veri, Fra, Lollo, Javi, Diegouolt, Fede, Ah Peter, il Mago Max, Zeynep, Bea, Basak. Sharing the painful first Mas- ter year made us great friends. Their friendship is one of the most important things I will take with me from my years in Barcelona. In more recent years, more friends have come. Petre, Ponti, Lina, Mapis were great hosts of dinners and great colleagues for beers and fun. Paula, Pablo, Felipe, Hannes, Johannes, Gonc¸alo, sharing lunches with them was a joy. v “THESIS23” — 2012/6/15 — 8:58 — page vi — #6 I will never thank enough my friends from outside economics. Nacho, por su amistad y por hacerme reir incluso cuando habla en serio, Cami, my piece of Rome in Barcelona, Pablete, Manel, Ona, El Moro, Cris, Daniela, Ciski, Fra and Alessia. To my neighborhood, Gracia, and its squares, crowded at night and pleasantly empty on Saturday morning. A small town in the heart of a great city. Finally, to the most important people of my life. I owe everything to my parents, Isabella and Alberto, who taught me to be curious and respectful, and to my brother Tommaso, who grew up with me during these years. My biggest thanks go to Raquel, for laughing with me in happy days and bearing with me in the bad ones. For believing in me and making me a better person. Her simple presence reminds me everyday that there is life beyond economics. Our beautiful cat, Panxo, is helping her on the task. Without their love and unconditional support I would not have completed this thesis. I dedicate it to them. vi “THESIS23” — 2012/6/15 — 8:58 — page vii — #7 Abstract This thesis investigates different social and political aspects of modern economies. The first chapter contributes to the natural resource curse debate, by showing that the impact of resource windfalls is different among democracies and autocracies. The results also point to the existence of a large heterogeneity in the response to resource shocks among autocracies. The second chapter focuses on metropolitan areas in the US, and deals with the issue of social capital formation. I examine one important aspect of social capital, trust, and argue that it is lower when income inequality between different racial groups in the metropolitan area is higher. The third chapter studies the relation between media influence and electoral voting in Italy. I relate electoral outcomes at the municipal level to differences in signal reception of Silvio Belusconi’s private TV network. The results show that greater exposure to commercial television increases support for Silvio Berlusconi’s party. Resum Aquesta tesi investiga diferents aspectes socials i pol´ıtics de les economies mo- dernes. El primer cap´ıtol versa sobre el debat a l’entorn dels recursos naturals, mostrant que l’impacte dels guanys imprevistos dels recursos es´ diferent entre de- mocracies` i autocracies.` Els resultats tambe´ indiquen l’existencia` d’una amplia` heterogene¨ıtat entre autocracies,` en la seva reaccio´ davant a variacions dels re- cursos. El segon cap´ıtol se centra en les arees` metropolitanes dels EUA i tracta el tema de la formacio´ de capital social. He examinat un aspecte important del capital social, la confianc¸a, i argumento que es´ baixa quan en la mateixa zona metropolitana hi ha una gran desigualtat en les rentes dels diferents grups racials. El tercer cap´ıtol estudia la relacio´ entre la influencia` dels mitjans de comunicacio´ i el vot electoral a Italia.` He relacionat els resultats electorals a nivell municipal amb les diferencies` en la recepcio´ del senyal dels canals privats de televisio´ de Sil- vio Berlusconi. El resultat mostra que una gran exposicio´ a la televisio´ comercial incrementa el suport pol´ıtic al partit de Berlusconi. vii “THESIS23” — 2012/6/15 — 8:58 — page viii — #8 “THESIS23” — 2012/6/15 — 8:58 — page ix — #9 Foreword The thesis is composed of three self-contained chapters that study different social and political aspects of modern economies. In the first chapter (joint with Francesco Caselli), we study theoretically and em- pirically whether natural resource windfalls affect political regimes. We document the existence of the following regularities. Natural resource windfalls have no ef- fect on the political system when they occur in democracies. However, windfalls have significant political consequences in autocracies. In particular, when an auto- cratic country receives a positive shock to its flow of resource rents it responds by becoming even more autocratic. Furthermore, we show that there is heterogeneity in the response of autocracies. In deeply entrenched autocracies like Saudi Arabia the effect of windfalls on politics is virtually nil, while in moderately entrenched autocracies like Nigeria windfalls significantly exacerbate the autocratic nature of the political system. To frame the empirical work we present a simple model in which political incumbents choose the degree of political contestability by decid- ing how much to spend on vote-buying, bullying, or outright repression. Potential challengers decide whether or not to try to unseat the incumbent and replace him. The model uncovers a reason for the asymmetric impact of resource windfalls on democracies and autocracies, as well as the the differential impact within auto- cratic regimes. In the second chapter, I study the relation between social capital and community heterogeneity in the context of the United States. Existing studies of social cap- ital formation in US metropolitan areas have found that social capital is lower when there is more income inequality and greater racial fragmentation. I add to this literature by examining the role of income inequality between racial groups (racial income inequality). I find that greater racial income inequality reduces so- cial capital. Also, racial fragmentation is no longer a significant determinant of social capital once racial income inequality is accounted for. This result is con- sistent with a simple conceptual framework where concurrent differences in race and income are especially detrimental for social capital formation. I find empiri- cal support for further implications deriving from this assumption. In particular, I show that racial income inequality has a more detrimental effect in more racially fragmented communities and that trust falls more in minority groups than in the majority group when racial income inequality increases. The third chapter (joint with Ruben Durante and Paolo Pinotti) investigates the im- pact of the diffusion of commercial television on political behavior and electoral competition in the context of Italy. We exploit differences across municipalities in the early availability of Silvio Belusconi’s private TV network, Mediaset, at- tributable to geomorphologic characteristics and controlling for the endogeneity of transmitters location and power. We document that municipalities that had ac- ix “THESIS23” — 2012/6/15 — 8:58 — page x — #10 cess to Mediaset channels prior to 1985, displayed significantly higher electoral support for Berlusconi’s party in 1994, when he first run for office. Our results suggest that pre-1985 exposure to Mediaset increases center-right vote shares by 1 to 2 percentage points. This effect is very significant and robust to several spec- ifications and falsification tests. In particular, we conduct placebo tests to show that pre-Mediaset exposure is not correlated with the vote share of any other party - both on the right and on the left - in any elections before or after 1994. x “THESIS23” — 2012/6/15 — 8:58 — page xi — #11 Contents List of figures xiii List of tables xvi 1 RESOURCE WINDFALLS, POLITICAL REGIMES, AND POLIT- ICAL STABILITY (Joint with F. Caselli) 1 1.1 Introduction . .1 1.1.1 Related Literature . .4 1.2 Natural Resources and Political Outcomes . .6 1.2.1 Model . .6 1.2.2 Analysis .