We explore how public opinion polls affect candidates' campaign spending in political competition. Generally, polls lead to (more) asymmetric behavior. Under a majority rule there always exists an equilibrium in which the initially more popular candidate invests more in the campaign and thereby increases her lead in expectation: polls create momentum. When campaigning is very effective and the race is very close, a second type of equilibrium may exist: the trailing candidate outspends and overtakes his opponent. Regardless of the type of equilibrium, polls have a tendency to decrease expected total campaigning expenditures by amplifying ex-ante asymmetries between candidates and thus defusing competition. When candidates care also for their vote share in addition to having the majority, candidates' incentives crucially depend on the distribution of voters' candidate preferences.
In this paper I develop a formal theory of campaign communications. Voters have priors about the quality of candidates' policies in the different policy issues and about the issues' relative importance. Candidates spend time or money (TV ads, public speeches, etc.) in an effort to influence voters' decision at the ballot. Influence has two simultaneous effects: (i) it increases the quality of the policy in the issue as perceived by the voters through policy advertising and (ii) it makes the issue more salient through issue priming, thereby increasing the issue's perceived importance. A strategy is an allocation of influence activities to the different issues or topics. I show conditions under which candidates' strategies converge or diverge, which issues - if any - will dominate the campaign, and under what conditions candidates are forced to focus on issues in which they are perceived to be weak. I develop a set of novel testable predictions and discuss the model's predictive power by example of the 2008 presidential campaign in the U.S.
Pay-as-you-go (PAYG) pension schemes are becoming increasingly unsustainable in the face of drastic population aging. Simultaneously, the contribution rates may aggravate an already serious unemployment problem. A regime switch to a funded system could help to alleviate the unemployment problem in addition to restoring sustainability of social security. This paper asks how the transition to a partially funded system is implemented such that all generations may share in the efficiency gains from lower unemployment. We propose a welfare based transition scheme that cuts contributions to the PAYG system and uses public debt to compensate old generations for their previously acquired pension claims. Relying on an overlapping generations framework with union wage setting, we show that this reform reduces unemployment, boosts capital accumulation and yields welfare gains to present and future generations.
This paper offers the first instrumental variables estimates of the wage returns to volunteer experience. The returns are substantial and differ considerably by gender. The results imply that the unequal valuation of volunteer experience by gender is more important in explaining the gender earnings gap than is the unequal valuation of part-time paid work experience. The results also indicate negative selection into unpaid work. In a simple model of optimal volunteering, negative selection implies that a lower cost of volunteering would produce both an expanded and higher-skilled pool of volunteers, and greater societal benefits from volunteer work.
In the 1980s and 1990s, the US labour market experiences a remarkable polarization along with fast technological catch-up, as Europe and Japan drastically improve their global innovation performance. Is foreign technological convergence an important source of employment and wage polarization? To answer these questions, we set up a Schumpeterian growth model with two asymmetric countries, heterogeneous workers, endogenous skill formation and occupational choice. A calibrated version of the model shows that foreign technological catching-up accounts for a non-negligible part of polarization in the US. Moreover, the model delivers predictions on the US wealth to income ratio consistent with empirical evidence.
