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Political Leaders' Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries
Author(s) -
Hayo Bernd,
Neumeier Florian
Publication year - 2016
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/ecpo.12071
Subject(s) - socioeconomic status , politics , economics , panel data , political science , public economics , demographic economics , sociology , demography , econometrics , population , law
This paper empirically analyzes the relationship between political leaders' socioeconomic backgrounds and public budget deficits utilizing panel data on 21 OECD countries from 1980 to 2008. Building on sociological, as well as economic research, we argue that the socioeconomic status of political decision‐makers, i.e., presidents or prime ministers, is an important determinant of fiscal budget decisions. Our theory‐consistent findings show that the tenures of lower‐class leaders – i.e., leaders of low socioeconomic status – are associated with a deficit‐to‐ GDP ratio which is 1.6 percentage points higher than that during tenures of upper‐class leaders.