Empirical essays on political economy

This thesis is about how elected politicians stay in power and about some of its economic and social consequences, fundamental political economy questions. It takes advantage of the decentralized political structure in the Philippines to test models of voter and politician behavior. In doing so, it contributes to the literature on clientelism and retrospective voting. In Chapter One, I assess the impacts of targeted government transfers on a local incumbent's electoral performance. I use the randomized roll-out of a CCT program in the Philippines where a number of municipalities are tightly controlled by political dynasties. In a competitive political environment, incumbent vote share is 26 percentage-points higher in municipalities where the program was implemented in all villages than in municipalities where the program was implemented in half of them.The program had no impact in municipalities with low levels of political competition. In Chapter Two, I test for the presence of political business cycles in Philippine municipalities over the period 2003-2009, a context where according to the literature such cycles are likely to be observed. I find robust evidence for the presence of political business. This effect is only present when I use quarterly data and vanishes when I aggregate the data at the yearly-level. The difference is not merely driven by a decline in statistical power due to aggregation: point estimates for the overall effects are 7 times larger when I use quarterly data than when I use yearly data. This discrepancy can be explained by a drop in employment post-election that dilutes the yearly effects. In Chapter Three, we estimate the impacts of being connected to local politicians, either currently in office or in opposition, on occupational choice. We use a large administrative dataset collected between 2008 and 2010 on all individuals in 700 Philippine municipalities along with information on all candidates in the 2007 and 2010 municipal elections. We rely on local naming conventions to assess blood and marriage links between households. Using individuals connected to successful candidates in the 2010 elections that did not run in 2007 as a control group, we find that connections to current office-holders increase the likelihood of being employed in better paying occupations. Individuals connected to candidates that were close to being elected in 2007 are less likely to be employed in better paying occupations.