Working Paper: CEPR ID: DP14619
Authors: Felipe Carozzi; Davide Cipullo; Luca Repetto
Abstract: This paper studies how political fragmentation affects government stability. We show that each additional party with representation in Parliament increases the probability that the incumbent government is unseated by 4 percentage points. Governments with more resources at their disposal for bargaining are less likely to be replaced. When they are, new government leaders are younger and better educated, suggesting instability may induce positive selection. We interpret our results in light of a bargaining model of coalition formation featuring government instability. Our findings indicate that the rising fragmentation in parliaments worldwide may have a substantial impact on stability and political selection.
Keywords: government stability; fragmentation; no-confidence votes; bargaining; alignment effect
JEL Codes: H1; H7; R50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bargaining resources (J52) | probability of government being replaced (D72) |
| government instability (O17) | selection of higher-quality politicians (D72) |
| entry of an additional party into a parliament (D72) | probability of the incumbent government being unseated (D72) |
| fragmentation (F12) | government stability (P16) |