Choosing Your Pond: A Structural Model of Political Power Sharing
Link to the paper | Supplementary Material | Earlier version
Abstract
I develop a model of party formation that explains within-party rent sharing, political selection, and party stability. Parties generate club goods through their control over government functions. Politicians share their political rents with party leaders in exchange for accessing parties’ club goods. I estimate the model for Turkey with a dataset of all listed politicians between 1995 and 2014. I find that the right-wing parties accumulate club goods more easily than they produce rents, which leads to strong party control. Counterfactual exercises provide insights on the institutions that improve the quality of politicians and prevent concentration of power
Delegation and Recruitment in Organizations: The Slippery Slope to “Bad” Leadership
(with Konstantinos Matakos and Janne Tukiainen)
Abstract
We construct a dynamic model of two-sided matching in labor markets with multi-dimensional agent and firm heterogeneity. We apply it to study optimal party structure and the decision of how (de)centralized candidate recruitment should be. Parties are non-unitary actors and compete at the local markets over recruitment of competent candidates. Local organizers possess an informational advantage over the distribution of politicians’ skill, which is positively related to electoral rent generation. Party leadership has a dual objective: they want simultaneously to maximize a) the organization’s rents and b) their retention probability. Thus, when deciding how centralized recruiting should be, leaders face a trade-off: delegating selection to local party organizations harnesses all available information and increases electoral returns, but also limits a leader’s ability to stack the organization with loyalists who are more likely to retain her should a (stochastic) leadership challenge arrives. Moreover, ideology alters this trade-off in ways that generate welfare non-monotonicities. We characterize an equilibrium delegation rule with two key properties: a) some high-skilled politicians may select into lower performing parties due to ideological alignment, and b) more moderate and competent leaders rely excessively on market-based recruitment and, as a result, survive relatively shorter at the helm of the organization.
All the “Missing” Ladies: Political Selection in High-stakes Contests
(with Elif Erbay and Konstantinos Matakos)
Abstract
How does political selection respond when the electoral stakes increase? We study the effect that changes in the intensity of electoral competition has on women’s political repre- sentation in Turkey. We leverage occurrence of two consecutive legislative elections within few months as a natural experiment giving rise to a DiD strategy which allows us to identify JDP’s changes in its list composition and rank as a response to heightened competition. We find that the latter led to a wholesale removal and demotion of women candidates from its lists, bucking the previous trend of increasing female representation. Heterogeneity anal- ysis further reveals that most of the women candidates were removed from electable seats and safe (conservative) districts. While this is consistent with theories of statistical discrim- ination, the removal of women even from inconsequential positions also reveals taste-based discrimination that has a compounding effect. A counterfactual exercise shows that had lists remained unchanged between the two elections, JDP’s female representation in parlia- ment would have been up by 50%, thus highlighting the role that intra-party politics play in exacerbating gender-based discrimination (own-gender bias) in political selection.
Syrian Refugees and Human Capital Accumulation of Working-Age Native Children in Turkey
(with Elif Erbay and Murat Güray Kırdar)
Journal of Human Capital, 17(4), pp.557-592.
Abstract
The arrival of Syrian refugees has significantly changed the labor-market conditions and the relative abundance of different skill groups in Turkey. We examine how the arrival of Syrian refugees affects school enrollment and employment of working-age native children using a difference-in-differences instrumental variable methodology. We find a significant drop in employment, largely due to children shifting from work-school balance to education only. School enrollment rises for boys, especially those with educated parents. However, the rate of girls not engaged in employment or education increases, particularly among those with less-educated parents, but decreases for boys with more-educated parents.
Political Entry Barriers and the Quality of Democracy
(with Emekcan Yücel)
Abstract
Small parties that have a slim chance of winning a seat exist in most democracies, yet their impact on democratic quality remains understudied. This paper examines the relationship between the nationwide inclusion threshold (NIT), which measures the level of political barriers for small parties, and democratic outcomes. Exploiting within-variation from 86 countries with a proportional representation or a mixed system from 1990 to 2018, we find that an increase in the NIT is linked to a decrease in the total number of parties competing in an election, a reduction in polarization and hate speech by political parties, and an increase in corruption and public good provision. At the same time, we find no discernible impact on over 30 indicators of democratic quality. Our findings suggest that while small parties may not cause structural changes in democratic influence the level of political competition and the political climate.
The Role of Cybersecurity in Economic Performance
(with Estefania Vergara-Cobos, Baran Berkay Barakçin, and Hagai Mei-Zahav )
Abstract
Utilizing novel data on over 10,000 disclosed cyber incidents across 190 countries and 21 industries, along with data on governments’ cybersecurity commitments, this paper investigates the impact of cybersecurity on both industries’ performance and macroeconomic outcomes. Specifically, employing an instrumental variable (IV) cross-country, cross-industry model with fixed effects, the study demonstrates that given an exposure level to cyber incidents, industries perform better in countries that have implemented robust national cybersecurity commitments, such as operational legal frameworks, cooperative measures, technical advancements, and capacity-building initiatives. At the macroeconomic level, the paper reveals a statistically significant negative correlation between the frequency of disclosed cyber incidents and GDP per capita in emerging economies, with more pronounced effects observed in the public sector, information and telecommunications, finance, and education industries.This research pioneers the estimation of the link between cybersecurity and economic performance, addressing the existing uncertainty regarding the returns on cybersecurity investments, particularly in developing countries. The findings underscore the critical importance of cybersecurity as firms navigate the digital era.
A Review of the Economic Costs of Cyber Incidents
(with Estefania Vergara-Cobos)
Abstract
Given the rapid digitization of societies and the increase in costly and sophisticated cyber incidents, there is a rising need to prioritize cybersecurity in the investment agendas of economic actors, especially, governments and firms. However, a major bottleneck in mainstreaming cybersecurity investments is the unclarity in the returns and the unidentified link between cyber incidents and economic performance. This literature survey brings together empirical studies on the direct and indirect costs of cyber incidents, highlighting issues in the study of risk-based approaches based on current estimates that could lead to misinformed decisions. First, this survey identifies the vast variety of unfounded estimates of the cost of cyber incidents. Second, the analysis dives into the difficulty of assessing the full spectrum of costs due to the existence of nonnegligible indirect costs. This article argues that to accurately protect cyberspace, policymakers and stakeholders should aim to understand the full spectrum of economic costs of cyber incidents by promoting research through data collection efforts.