Institutions concurring to overcome market failures and coordination issues are relevant contributors to economic growth and development. Nonetheless, public interventions may incentivise corruptive behaviour or a distorted allocation of resources, if the state apparatus is not adequately regulated in turn. These different implications of the involvement of the public sector in the economy are the object of my thesis.
In Chapter 1, I propose a historical and economic analysis of the heterogeneous institutional setting defined by the British in Central India after winning the third Anglo-Maratha war in 1818. Owing to institutional quality, the positive synergies between the private and public sectors in the treated group have enabled the construction of the railway infrastructure, which drove diverging development paths with the control group. In fact, a relevant difference in nutrition and wealth indicators is still measured in 2015.
Instead, the public offices under study in Chapter 2 seem to be engaging in a self-interested vote-buying strategy by making the discretionary hirings of local workforce depend on the local electoral timing. In this analysis, the outcome of interest proxies the ratio of new employees who are entitled to vote in the Italian regional elections. It outlines a drop of nearly 30 percentage points after the mandated deferral due to Covid, and a surge close to the same magnitude after the new election announcement, vis-à-vis the regions that were not meant to vote in the same period. These effects are consistent across two different empirical strategies, involving DID and RD estimation.
Similarly, Chapter 3 - joint with Giacomo De Luca and Jahen Rezki - uses a combination of RD and DID techniques to understand if the emergence of dynasties of politicians has an impact on local development and public expenditures in Indonesia. There, the phenomenon has become widespread and is considered as a possible threat to the democratisation process. To this purpose, our data cover the island of Java at the district level during the period 2005-2020. We do not find general evidence of worse outcomes immediately attributable to dynastic rulers.