Political Leaders' Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries

24 Pages Posted: 7 Mar 2016

See all articles by Bernd Hayo

Bernd Hayo

University of Marburg - School of Business & Economics

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

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Date Written: March 2016

Abstract

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.

Suggested Citation

Hayo, Bernd and Neumeier, Florian, Political Leaders' Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries (March 2016). Economics & Politics, Vol. 28, Issue 1, pp. 55-78, 2016, Available at SSRN: https://ssrn.com/abstract=2742418 or http://dx.doi.org/10.1111/ecpo.12071

Bernd Hayo (Contact Author)

University of Marburg - School of Business & Economics ( email )

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Marburg, D-35032
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Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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