- IMT Lucca
Wednesday, April 6, 2016
Polo Santa Marta, Via Cantarane 24, Stanza 1.59
This paper develops a dynamic signaling political model which analyzes the double-edged role of education in modern societies: citizens are voters with different levels of political sophistication and producers with different levels of human capital. We argue the two activities are strictly interrelated: more politically sophisticated societies are able to punish dissonant politicians more effectively that, in turn, invest more in productive public goods. These foster private investment in human capital, making future electoral accountability more sophisticated over time. The combination of the human capital accumulation mechanism and this political psychology agency process creates the potential for multiple steady states, one for poorly educated societies with dissonant politicians and one for well-educated societies with congruent politicians. This political equilibrium reconciles the political agency theory with the empirical evidence indicating a narrow within-country variation, but a significant variability in the cross-country politician types distribution. Finally, we provide novel empirical evidence in support of the political psychology hypothesis that well educated voters’ political beliefs are less likely to be manipulated by rent-maximizing politicians.