Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216610 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8214
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We show that regional heterogeneity of underlying fundamentals (e.g. economic history, geography, social capital) can lead to extreme voting in federations. When the outcome of federal policies – such as transfer schemes, market regulation or migration laws – depends on these fundamentals, the set of regions that wins or loses from a given policy is fixed. This gives voters a strategic incentive to distort the policy magnitude, by electing federal representatives that are extremely protective of regional interests. Interestingly, the benefits of selecting tough negotiators outweigh those of belonging to the ruling coalition. We test our predictions by looking at parties' performances at national and European Parliament elections from 1990 onwards, and find that strategic voting is indeed U-shaped: winning and losing member states vote more extremely than those in the middle. Our online survey provides further evidence.
Subjects: 
political extremism
interregional redistribution
federalism
strategic delegation
bargaining
coalitions
EU elections
Euroscepticism
populism
JEL: 
D72
H60
H71
H77
Document Type: 
Working Paper
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