The Power of Parties
CESifo, Munich, 2013
CESifo Working Paper No. 4119
![](https://cesifo.org/DocImg/cesifo1_wp4119.jpg?c=1689237020)
As with the market for goods and services, democratic competition involves political parties offering their services (policy programs) to citizen-consumers who vote for their preferred partisan supplier. Little is known about the partial effect of a shift in parties’ seat shares for given voter preferences, particularly in proportional representation systems. We estimate party effects using a regression discontinuity design tailored to proportional systems. Based on rich local government data, the analyses show that parties matter for fiscal policies. A larger left-wing party leads to more property taxation and higher user charges. It also leads to higher spending on child care but less on old-age care. These effects are caused both by changes in the representation of individual parties and by shifts between the party blocs.
Public Finance
Public Choice