Govern Thy Neighbor: The Fiscal Governance of Socially-Embedded Local Officials

• In Event: Sub-National Politics

Abstract

How does local governance change when elected officials are long-standing members of the community? Political science has long been interested in how informal social structures can impact the functioning of formal state institutions, be it through ethnic ties between state actors and citizens (Kasara, 2007) or through the social embeddedness of local officials (Granovetter, 1975; Bhavnani and Lee, 2016). In this paper, I argue that the cultural underpinning of social embeddedness can shape substantially such dynamics. Focusing on close mayoral elections across Italian municipalities, I employ a regression discontinuity design to identify the effect of electing a mayor born in the town. In the period between 1998 and 2018, I analyze over 8000 elections where a native candidate either wins or loses against a non-native candidate by a percentage small enough to be considered as-if random. My results show that electing a native mayor impacts substantially the fiscal governance of the municipality but that the effect changes dramatically on the local cultural context. In Northern and Central Italy, native mayors strengthen the local fiscal contract, with higher tax rates and revenue, decreased spending on tax enforcement and more redistributive social services. By contrast, in Southern Italy, these effects largely disappear, and even present the opposite pattern. In highlighting this divergence, I reconnect with the literature on the North-South divide in Italy and contribute to the long-standing debate over the roots of such regional dissimilarity. In this sense, I offer suggestive evidence against both Banfield’s seminal ethnographic work (1958) on the concept of “Amoral familism”, as well as Putnam’s thesis on civic trust and community cohesion (1994). Instead, my work falls in line with recent experimental work on the importance of trust between citizens and institutions, social norms, and expectations of ingroup cooperation (Bigoni, Gambetta et al, 2016). More broadly, my findings underscore that social ties between citizens and government institutions matter and that local culture can play a crucial mediating role in the functioning of the fiscal contract.

Author

• Simone Paci, Columbia University