Political Economy.

• Author: Trebbi, Francesco

The mission of the NBER's Political Economy Program is to provide a forum for the discussion and distribution of theoretical and empirical research that identifies and addresses political constraints on economic problems. The program flourished under the vision and leadership of founding director Alberto Alesina from its launch in 2006 until his untimely death in 2020. As codirectors, we are grateful to him for shaping it into the active research hub it is today. The program currently has 95 affiliates, who have produced more than 1,000 working papers since the last program report, in 2013.

Political Economy is a broad-tent program in terms of methodology, geography, time period, and topics covered. Members study not only what might be thought of as traditional political economy--the links between economics and politics, such as the study by Daron Acemoglu, Suresh Naidu, Pascual Restrepo, and James Robinson of how elections and institutions impact growth (1)--but also investigate how forces like moral values and behavioral impulses impact politics and economics. Benjamin Enke's investigation of morality and voting (2) and Pietro Ortoleva and Erik Snowberg's exploration of the role of overconfidence in political behavior (3) are but two examples of the latter.

We cannot cover the full breadth of program affiliates' output in the decade since the last report. We therefore will not revisit the four topics--institutions, diversity, US elections, and culture--that it highlighted, except to say that they are still highly researched. As one illustration, Alberto Bisin and Paola Giuliano convene a full-day meeting on cultural economics adjacent to the spring program meeting. We highlight instead three different topics on which program affiliates have focused their efforts: political polarization, state capacity, and conflict. All have large welfare significance.

Polarization

Extreme populist parties have gained strength across democratic nations in the years following the 2008-09 financial crisis, and alongside this phenomenon has grown researchers' interest in polarization. In addition to studying diverging political views, Levi Boxell, Matthew Gentzkow, and Jesse Shapiro document a rise in affective polarization--negative attitudes toward nonmembers of one's political party--in six of 12 OECD countries investigated, with the greatest increase in the United States. (4) [Figure 1] Party identification now seems to operate as a key dimension of individual identity, with research demonstrating a connection between partisanship and a range of nonpolitical behaviors, from Gordon Dahl, Runjing Lu, and William Mullins's study of fertility (5) to Emanuele Collonnelli, Valdemar Pinho Neto, and Edoardo Teso's look at hiring in Brazil. (6)

The central concern of the research on polarization is understanding the causes of its rise and underlying drivers. The bulk of the empirical analysis supports a role for three major causes: trade and globalization, ethnocentrism, and the media. Regarding trade, Cevat Aksoy, Sergei Guriev, and Daniel Treisman demonstrate that, across 118 countries, opinions of the incumbent politician diminish as imports increase. (7) Moderates are driven out of office in the face of rising Chinese trade exposure, Christian Dippel, Robert Gold, and Stephan Heblich show for Germany; (8) and David Autor, David Dorn, Gordon Hanson, and Kaveh Majlesi document for the US.

Evidence of a role for ethnocentrism in the rise of populism is provided by, among others, Simone Moriconi, Giovanni Peri, and Riccardo Turati, who show that low- skilled immigration has driven nationalistic preferences across 12 European nations since 2007. (10) Immigration also decreases support for redistributive policies, according to Alesina, Elie Murad, and Hillel Rapoport, (11) contributing to a long literature that seeks to understand why inequality does not predict support for increased redistribution, a puzzle that has great relevance for our understanding of polarization. In fact, Alesina, Armando Miano, and Stefanie Stantcheva find that just having survey respondents think about immigration lowers support for redistribution. (12) Jesper Akesson, Robert Hahn, Robert Metcalfe, and Itzhak Rasooly find similar effects for race. (13)

Outside of the connection with polarization, program affiliates remain interested in how racial, ethnic, religious, and gender identity impact political preferences, behavior, and, most of all, treatment received in the political sphere. Elizabeth Cascio and Na'ama Shenhav analyze 100 years of women's voting in the United States. (14) Across contexts, contributors are exploring how ethnic and religious concordance between representatives and voters impacts receipt of public goods. See, for example, Kaivan Munshi and Mark Rosenzweig on India (15) and Brian Beach, Daniel B. Jones, Tate Twinam, and Randall Walsh on California. (16) Researchers are also continuing to explore how voters' voices are suppressed by race, as in Federico Ricca and Francesco Trebbi's work on how endogenous political institutions keep minorities from voting in the present-day US (17) and Enrico Cantoni and Vincent Pons' analysis of voter ID laws. (18)

Returning to polarization, ethnocentrism and economic causes are not necessarily at odds: Jiwon Choi, Ilyana Kuziemko, Ebonya Washington, and Gavin Wright provide evidence for an interactive role for the two forces in political beliefs. (19) Nor are they the only two explanations explored for increased polarization. Political...