Research

Working papers

Do female leaders matter? Evidence from an unexpected government change (with Klaus Gruendler, Niklas Potrafke and Tuuli Tähtinen) [Current version]

Reject and Resubmit at American Economic Journal: Economic Policy

The gender gap in politics is especially pronounced at the highest levels of decision-making. This paper investigates the influence of female leadership on the representation of women in government positions. We exploit a unique case of unexpected change in political leadership, which led to the appointment of Germany’s first female head of state government in 1993. Using the synthetic control method, we show that appointing a female leader increased the promotion of women to government positions. The share of women in government positions increased by 5 percentage points (or 45%) once Heide Simonis came into office. Our cross-country panel data analysis for 177 countries during 1966-2023 shows that the share of female cabinet members was on average 3 percentage points higher under female than male heads of government, suggesting that the effect of female leadership extends beyond our case study. These findings highlight how even one influential woman can help other women reach high political positions.

Mergers and transfers

The overarching goal of municipal territorial reform is to realize economies of scale. At the same time, fiscal equalization schemes often grant disproportionately higher grants to large municipalities. Little is known about the consequences of encompassing territorial reforms on fiscal equalization transfers. I examine this question using the example of the German state of Saxony, where the number of municipalities decreased by 74% from 1,614 in 1992 to 419 in 2019. I use generalized difference-in -difference and event study estimations to identify how mergers affect fiscal transfers and the local budget. The results suggest that municipalities do not choose merging partners to maximize transfer levels, i.e. there is no selection into treatment. However, territorial reforms increase fiscal transfers persistently: reform municipalities gain up to €34 per capita in yearly transfers, an effect that amounts to 11% of the mean transfer in the sample. With the exception of administrative expenditures, municipal spending did not change systematically after mergers.

Does highway access influence local employment? Evidence from German municipalitites (with Stefanie Gaebler)

We examine how highway accessibility influences local employment outcomes. We exploit the stagewise expansion of the “Baltic Sea highway”, the largest contiguous highway construction project in Germany since 1945. Results from difference-in-differences estimations and an event study approach show that highway access influences local employment outcomes in peripheral municipalities within 10 km road distance. Improved accessibility decreases employment by 9%. These effects are driven by reduced commuter flows within the periphery, while we find opposing effects on core municipalities. Improved accessibility also gives rise to a shift of population and economic activity from the periphery to the core, weakening the periphery as a place of work. 

The effects of corporate taxes on business entry and exit (with Paul M. Kindsgrab, James R. Hines and Niklas Potrafke)

This paper empirically studies the effect of local business taxes on business entry. The paper combines 5,111 local (municipal) business tax rate changes with administrative data on the universe of business (corporate employer establishment) entrants in Germany between 2004-2012. Using a dynamic difference-in-differences approach,the paper estimates that a one-percentage point increase in the local business tax rate reduces business entry by -4% over the medium term. Cumulated over a six-year period, the loss in business entry amounts to -18% of an entry cohort. The drop in entry is driven primarily by single-establishment firms with less than three employees. 

Economic voting in electoral precincts: Evidence from Germany's 400 largest cities (with Klaus Gruendler, Philipp Heil, Niklas Potrafke and Marcel Schlepper)

The theory of economic voting describes that voters in democracies judge governments by how well they manage the economy. The empirical evidence on the theory of economic voting is mixed. Previous empirical studies have typically employed data for large geographical units such as municipalities. We have collected a novel and fine-grained dataset on the geo-coded electoral precinct-level, which allows us to capture the previously unobserved within-heterogeneity. Our dataset includes a total of 23,880 electoral precincts and covers the 400 largest cities in Germany, ranging from large metropolises such as Berlin (3,600,000 inhabitants) to mid-size and small towns such as Schönebeck (30,000 inhabitants). We link the electoral precincts with granular address-level data on socio-demographic and economic characteristics collected by the data science company infas360. For causal identification, we use the exogenous economic shock arising from the Covid-19 pandemic as a Bartik instrument. The Covid-19 shock exerted heterogeneous effects across industries and, hence, across electoral precincts depending on the industrial structure. Our paper provides important new insights into the longstanding debate on the role of economic performance for voters’ electoral choices. Confirming the theory of economic voting, we show that voters support left-wing parties if they suffered income losses arising from the Covid-19 pandemic.

Do place-based policies matter at the poll? (with Florian Dorn and Dimitria Freitas)

This paper examines whether place-based policies influence electoral outcomes by exploiting the largest public sector relocation program in recent decades in Germany. We analyze the effects of relocating over 60 public authorities and institutions and more than 3,000 civil service jobs to municipalities in structurally weak regions of Bavaria between 2015-2025. Using a difference-in-differences approach leveraging the staggered rollout of relocations, we find that the program significantly impacted voting patterns. The Christian Conservative party (CSU) that actively claimed credit for the policy experienced a strong incumbency advantage, gaining over 2 percentage points in state elections in treated municipalities. Meanwhile, their coalition partner, the Free Voters (FW), was punished at the polls, losing 1.6 percentage points in state elections. The relocation program also had some success in containing the rise of the far-right populist AfD party, reducing their vote share by 0.5 to one percentage point in treated areas. Additionally, we observe a small but significant decrease in voter turnout of 0.72 percentage points in the first election following a relocation, suggesting a modest demobilization effect. Our analysis reveals limited geographical spillover effects to neighboring municipalities, suggesting that the policy's impact was largely confined to the host localities. We also find small spillovers to the federal elections, with the CSU gaining 0.7 percentage points and the FW losing 1.5 percentage points. Our results suggest place-based policies can shape electoral outcomes, potentially helping the incumbent party that claims credit for the policy win support in economically distressed regions while counteracting the rise of populist movements. The findings have implications for governing strategies and maintaining democratic stability in the face of growing regional economic disparities.

Doerr, L., Potrafke, N. and Roesel, F. (2021): Populists in power, CESifo Working Paper No. 9336 [Working Paper]