Torsten Persson

The period since the Washington Consensus has seen a gradual, though sometimes stuttering, growth in liberal political institutions that support free speech, open contests for power, and constraints on the arbitrary use of power. Meanwhile, economists and other social scientists have studied the interplay of economics and politics along alternative paths of development – paths associated with more or less solid underpinnings for a market economy and more or less peaceful resolutions of domestic conflict. Our chapter explores whether this research supports a consensus around the kind of political institutions, values, and norms that can produce flourishing economies and societies.

This paper studies individual and social motives in tax evasion. We build a simple dynamic model that incorporates these motives and their interaction. The social motives underpin the role of norms and are the source of the dynamics that we study. Our empirical analysis exploits the adoption in 1990 of a poll tax to fund local government in the United Kingdom, which led to widespread evasion. The evidence is consistent with the model's main predictions on the dynamics of evasion.

We study the politicians and voters of the Sweden Democrats, a major populist radical-right party. Based on detailed administrative data, we present the first comprehensive account of which politicians are selected into such a party. Surveys show that politicians and voters of the Sweden Democrats share strong anti-establishment and anti-immigration attitudes that drastically set them apart from Sweden’s other parties. Searching for individual traits that link naturally to these attitudes, we classify the universe of Swedish politicians and voters by social and economic marginalization and exposure to immigration. Politicians from the Sweden Democrats over-represent marginalized groups without strong attachments to the labour market or to traditional nuclear families, which instead are under-represented among politicians in all other parties. Among voters, the Sweden Democrats have higher electoral support in precincts with higher shares of the same marginalized groups. We see the mobilization of the marginalized as an important driver of the party’s success. Finally, we uncover that Sweden-Democrat politicians score lower on a number of valence traits than other-party politicians. In sum, the rise of the Sweden Democrats raised political representation for marginalized groups, but this came at a valence cost.

This paper studies how material incentives and social norms shape ethnic identity choices in China. Provincial policies give material benefits to minorities, which consequently affect the ethnicity choices for children in ethnically mixed marriages. We formalize the ethnic identity choice in a simple framework, which highlights the interaction of (i) material benefits stemming from ethnic policies, (ii) identity costs associated with breaking the norm of following the father’s ethnicity, and (iii) social reputations altering the importance of identity costs. Consistent with the model, we find that ethnic policies increase the propensity to break the prevailing norm for mixed families with minority mothers. Moreover, the impact of ethnic policies is larger in localities where more such families follow the norm. More broadly, our study shows (1) how government policies can shape identity choices and (2) how one can allow for both complementarity and substitutability between individual and social motives in empirical analyses.

What makes countries engage in reforms of mass education? Motivated by historical evidence on the relation between military threats and expansions of primary education, we assemble a panel dataset from the last 150 years in European countries and from the postwar period in a large set of countries. We uncover three stylized facts: (i) investments in education are associated with military threats, (ii) democratic institutions are negatively correlated with education investments, and (iii) education investments respond more strongly to military threats in democracies. These patterns continue to hold when we exploit rivalries in a country’s neighborhood as an alternative source of variation. We develop a theoretical model that rationalizes the three empirical findings. The model has an additional prediction about investments in physical infrastructures, which finds support in the data.

The article builds a simple model to investigate how different types of armed conflict shape fiscal capacity: the state's ability to raise revenue from taxes. It starts from the simple observation that external war tends to generate common interests across groups in society, whereas internal, civil war entails deep conflicting interests across groups. Our model predicts that—compared to a society without conflict—civil wars lead to smaller investments in fiscal capacity, whereas prospects of external war generally lead to larger investments. Correlations in international data on conflicts and taxation are, by and large, consistent with these predictions

We present a theoretical model of a parliamentary democracy where electoral competition inside coalition governments induces higher spending than under single party governments. Policy preferences of parties are endogenous and derived from opportunistic reelection motives. The electoral rule affects government spending, but only indirectly: proportional elections induce a more fragmented party system and a larger incidence of coalition governments than do majoritarian elections. Empirical evidence from post-war parliamentary democracies strongly supports these predictions.

The paper presents empirical findings regarding the economic policy consequences of constitutional arrangements, in three different dimensions. First, the data are consistent with several theoretical predictions about the consequences of electoral rules and forms of government for fiscal policy and rent extraction, even when non-random constitution selection is taken into account. Second, empirical tests of the predictions from a new comprehensive model of parliamentary democracy show that proportional elections raise government spending through their indirect consequences for party structures and types of government, rather than through their direct effects on policymaking incentives. Third, new empirical results suggest that constitutional arrangements may have important consequences for structural policies that promote long-run economic performance, hinting at a missing link in the causal chain from history to current economic performance. All these empirical findings appear statistically robust, and the estimated effects are large enough to be of genuine economic interest.