Applied Microeconomics
Applied Microeconomics
The Applied Microeconomics research group unites researchers working on a broad array of topics within such areas as labour economics, economics of education, health economics, family economics, urban economics, environmental economics, and the economics of science and innovation. The group operates in close collaboration with the CAGE Research Centre.
The group participates in the CAGE seminar on Applied Economics, which runs weekly on Tuesdays at 2:15pm. Students and faculty members of the group present their ongoing work in two brown bag seminars, held weekly on Tuesdays and Wednesdays at 1pm. Students, in collaboration with faculty members, also organise a bi-weekly reading group in applied econometrics on Thursdays at 1pm. The group organises numerous events throughout the year, including the Research Away Day and several thematic workshops.
Our activities
Work in Progress seminars
Tuesdays and Wednesdays 1-2pm
Students and faculty members of the group present their work in progress in two brown bag seminars. See below for a detailed scheduled of speakers.
Applied Econometrics reading group
Thursdays (bi-weekly) 1-2pm
Organised by students in collaboration with faculty members. See the Events calendar below for further details
People
Academics
Academics associated with the Applied Microeconomics Group are:
Research Students
Events
Konstantinos Matakos
Abstract:
We explore the impact of unemployment on party-system fragmentation and the political institutions of industrialized countries via economic (redistributive) voting. Employing a four-party model with two dimensions of choice (fiscal policy and ideology), we document a non-monotonic relationship between unemployment and fragmentation that traditional voting theory cannot account for. In equilibrium, big parties woo the group of voters (unemployed) which are relatively more willing to switch their votes in response to more redistribution(or higher public spending) financed through labour taxation. For low levels of unemployment that allow for higher redistribution, an increase in unemployment increases the amount of "swing-voters" that are up for grabs. Hence, fragmentation initially decreases before taking the uphill. We test our findings on OECD economies, using oil price shocks as an instrument for unemployment. The results yield robust support for our theory. We find that variation in unemployment alone can account for two-thirds of the variation in party-system fragmentation (an 1% increase in the unemployment rate is associated with a 2% decrease in fragmentation). In fact, the economy is the single most important determinant of party-system structure in a democracy. We also provide an alternative test using data from greek regional elections to exploit the information shock on the true level of debt as a natural experiment. We find that public spending cuts caused an increase in fragmentation. We confirm again the non-monotonic relationship between unemployment and electoral fragmentation, as public spending became scarcer. Hence, our model explains how parties' preferences for fiscal discipline or redistribution vary with the degree of salience of unemployment. It can also explain why political systems with similar characteristics exhibit differential degrees of tolerance for unemployment. Finally, it highlights the importance of institutional and fiscal constraints in guaranteeing political pluralism.