Partisanship and Public Investment in Human Capital

32 Pages Posted: 4 Apr 2022 Last revised: 4 Oct 2023

Date Written: March 8, 2022

Abstract

We consider a setup where a public investment in human capital is decided as the outcome of an electoral competition between two office-motivated politicians. This decision ultimately impacts voters’ financial performance. We show that sufficiently strong partisanship generates the optimal level of a public investment in human capital, i.e., the level that maximizes voters' consumption on aggregate. However, the public investment can be inefficiently large if households with extremely low skills abstain from voting, given that politicians are ex ante aware of the abstention.
The public investment can be inefficiently small in the absence of partisanship.

Keywords: partisanship, voting, human capital, financial performance

JEL Classification: D72, H52

Suggested Citation

Papageorgiou, Stylianos and Xefteris, Dimitrios, Partisanship and Public Investment in Human Capital (March 8, 2022). Available at SSRN: https://ssrn.com/abstract=4052553 or http://dx.doi.org/10.2139/ssrn.4052553

Stylianos Papageorgiou (Contact Author)

University of Cyprus ( email )

Cyprus

Dimitrios Xefteris

University of Cyprus ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus

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