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: Suggested Citation