Does the ideology of the political majority affect school spending? Evidence from Swedish municipalities.
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
In this paper we examine whether or not the ideology of the political majority affects school spending as a part of local government expenditure. When trying to answer this question by way of econometric analysis we cannot simply use ordinary least squares because of the problems with endogeneity related to political majority in local government.
We use regression discontinuity design (RDD) as a means to give us estimates of the causal effect of the ideology of the political majority on school spending. When using RDD we look at the effect on school spending when vote share of the left-wing parties exceeds 50 percent. The method is used on a panel data set from Swedish municipalities covering the years 1998 to 2012.
The paper reviews the median voter theorem and the Tiebout model and how there two theories contradicts the idea that party control would have an effect on school spending in Swedish municipalities. Various critiques of these models are also presented.
Previous research – using either RDD in local public finance or looking at school spending in combination with ideology – show a small indication that there is a difference in school spending between political majorities.
Our results gives us vague indication that the true effect of a left-wing majority on school spending is not likely negative nor highly positive. Insufficient amount of data prevents us from making any definite conclusions. We are therefore unable to say whether the median voter theorem hold or if Tiebout sorting forces are at work in Swedish municipalities.
Place, publisher, year, edition, pages
local public finance, regression discontinuity design, median voter theorem, Tiebout model, school spending, Swedish municipalities
IdentifiersURN: urn:nbn:se:uu:diva-226545OAI: oai:DiVA.org:uu-226545DiVA: diva2:726379
Liang, Che-Yuan, Forskare
Ohlsson, Henry, Professor