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
In this paper, we examine the impact of unemployment on electoral outcomes and the structure of the party-system via the link of cliental relations. Employing an endogenous-entry, multi-party model with two dimensions of choice (policy and ideology), we study the effect of unemployment on electoral fragmentation. We show that fragmentation decreases as unemployment increases. In equilibrium, unemployed voters have stronger incentives to vote for the parties making the most popular policy promises (high public spending), despite potential ideological divergence. That is, their voting behaviour resembles that of a client in a "client-patron" relationship. We also test our hypothesis in a sample of OECD economies, from 1960-2007, using oil price shocks as an instrument for unemployment. The results yield robust and statistically significant support for our hypothesis. We find that an 1% increase in the unemployment rate is associated with a 2% decrease in fractionalization. This negative relationship between unemployment and electoral fragmentation, hints the possibility that dominant parties might have a stronger preferecne for fiscal discipline at the expense of unemployment reduction, thus, giving rise to "political" unemployment.
Keywords: rational voting, electoral fractionalization, unemployment, public spending, coalition-proof equilibrium, instrumental variables, political cycles.
JEL classification: C22, C23, C26, C70, D72, H00, H69, J68