Applied Micro Seminar - Cailin Slattery (Berkeley)

Abstract: 

The title and abstract for the talk: The Political Economy of Subsidy-Giving 

Subsidy-giving is popular with politicians and voters, despite uncertainty over the economic benefit any given subsidy generates. In this paper I quantify the political benefit of subsidy-giving by combining hand-collected subsidy data, county level election returns, and an original survey of voters. While subsidy-giving generates votes for incumbent governors, the effect is not due to job creation. Instead, it is the salience of subsidy deals that drives electoral rewards. Subsidy-giving receives 20% more local news coverage than other job creation policies. Electoral accountability creates a distortion, leading incumbents to favor the more salient policy to other, more cost-effective, strategies.  

Location: B03, Ricardo LT, Drayton House