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The political economy of local government in Croatia: winning coalitions, corruption, and taxes
Vuk Vuković* 
Article | Year: 2017 | Pages: 387 - 420 | Volume: 41 | Issue: 4 Received: June 1, 2017 | Accepted: October 20, 2017 | Published online: December 11, 2017
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FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
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Variable | Observations | Mean | Std. Dev. | Min | Max | W/S ratio | 546 | 0.270 | 0.102 | 0.034 | 0.681 | W/S_binary | 546 | 0.469 | 0.499 | 0 | 1 | Corruption Index | 546 | 0.083 | 0.127 | 0 | 0.75 | Tax rate (prirez) | 546 | 0.042 | 0.043 | 0 | 0.18 | Re-election | 546 | 0.731 | 0.444 | 0 | 1 | Years in power | 546 | 8.668 | 3.532 | 2 | 12 | Turnout | 546 | 0.478 | 0.100 | 0.231 | 0.886 | HDZ vote share | 546 | 0.206 | 0.115 | 0.003 | 0.675 | SDP vote share | 546 | 0.244 | 0.098 | 0.019 | 0.523 | Mayor gov | 546 | 0.676 | 0.468 | 0 | 1 | Size of gov coalition | 546 | 2.170 | 1.136 | 1 | 7 | Mayor majority | 545 | 0.585 | 0.112 | 0.231 | 1 | EPI | 546 | 0.818 | 0.177 | 0 | 0.996 | Unemployment | 546 | 0.193 | 0.093 | 0.04 | 0.567 | Income per capita | 546 | 1696.8 | 438.5 | 519.9 | 2973.6 | Grants per capita | 546 | 507.3 | 998.5 | 0 | 11575.9 | Croats | 546 | 0.889 | 0.172 | 0.018 | 1 | Average age | 546 | 42.642 | 3.330 | 33.1 | 63.3 | Years of education | 546 | 9.842 | 0.875 | 5.925 | 12.132 | War disabled per 1000 | 546 | 8.539 | 8.082 | 0 | 64.98 | Settlement size | 546 | 3.006 | 0.545 | 1.65 | 5.78 | Assembly size | 546 | 13.385 | 3.897 | 7 | 51 |
Note: The data was collected for all 556 municipalities but 10 of them had no procurements in the given years so they were excluded from the dataset. Including them as a zero value does not influence the findings. Sources: See appendix.
Dependent variable:
Years in power (Ti) | (1) | (2) | (3) | (4) | W/S ratio | -4.135 (1.55)*** | -3.779 (1.56)** | -4.898 (1.61)*** | -3.913 (1.71)** | Corruption index | | 2.581 (1.2)** | 2.446 (1.24)** | 2.36 (1.18)** | Size of gov coalition | -0.613 (0.15)*** | -0.641 (0.145)*** | -0.661 (0.143)*** | -0.681 (0.143)*** | Mayor majority | 8.889 (1.13)*** | 8.851 (1.14)*** | 9.078 (1.11)*** | 9.332 (1.107)*** | EPI | -1.281 (0.97) | -1.454 (0.98) | -1.725 (0.97) | -1.172 (1.07) | Mayor gov | 0.259 (0.41) | 0.25 (0.40) | 0.343 (0.40) | 0.275 (0.41) | HDZ vote share | 2.294 (1.57) | 2.196 (1.59) | 2.843 (1.54)* | 2.818 (1.93) | SDP vote share | 6.424 (2.15)*** | 5.915 (2.18)*** | 3.339 (2.42) | 3.738 (2.61) | Unemployment | | | -5.77 (2.28)** | -7.29 (2.55)*** | Income p/c | | | -0.0007 (0.0004) | -0.0007 (0.0006) | Grants p/c | | | 0.0002 (0.0001) | 0.0003 (0.0001)** | Controls | No | No | No | Yes | N | 546 | 546 | 546 | 546 | R2 | 0.1869 | 0.1951 | 0.2102 | 0.2194 | F-test (p-value) | 27.53 (0) | 24.29 (0) | 21.42 (0) | 15.70 (0) |
Note: OLS regressions performed throughout. Control variables include the municipality and city specific controls: Croats, Average age, Years of education, War disabled, Settlement size, and Assembly size. Standard errors are robust to heteroskedasticity. *** denotes significance at 1%, ** at 5%, and * at 10%.
Dependent variable: Corruption index (ki) | (1) | (2) | (3) | (4) | W/S ratio | -0.138 (0.06)** | -0.122 (0.06)** | -0.121 (0.06)* | -0.113 (0.06)* | Tax rate (prirez) | | | | 0.267 (0.129)** | Size of gov coalition | 0.01 (0.005)* | 0.006 (0.005) | 0.006 (0.005) | 0.005 (0.143) | Mayor majority | 0.014 (0.039) | 0.02 (0.038) | 0.031 (0.039) | 0.033 (0.04) | EPI | 0.067 (0.032)** | 0.083 (0.031)** | 0.078 (0.032)** | 0.074 (0.032)** | Mayor gov | 0.003 (0.01) | 0.001 (0.01) | 0.005 (0.01) | 0.006 (0.01) | HDZ vote share | 0.038 (0.068) | 0.008 (0.069) | 0.018 (0.088) | 0.014 (0.089) | SDP vote share | 0.197 (0.10)* | 0.05 (0.10) | 0.058 (0.12) | 0.063 (0.12) | Unemployment | | 0.117 (0.09) | 0.092 (0.101) | 0.079 (0.10) | Income p/c | | 8.38x10-5 (1.48x10-5)*** | 4.59x10-5 (2.43x10-5)* | 4.06x10-5 (2.4x10-5)* | Grants p/c | | -8.14x10-6 (3.17x10-6)** | -9.42x10-6 (4.2x10-6)** | -9.44x10-6 (4.1x10-6)** | Controls | No | No | Yes | Yes | N | 546 | 546 | 546 | 546 | R2 | 0.0498 | 0.0989 | 0.1088 | 0.1158 | F-test (p-value) | 4.56 (0) | 8.54 (0) | 6.90 (0) | 6.99 (0) |
Dependent variable: Re-election (Ri) | Small winning coalition
(W/S < 0.26) | Large winning coalition (W/S > 0.26) | | (1) Probit | (2) LPM | (3) Probit | (4) LPM | Corruption ki | 0.948 (0.508)* | 0.954 (0.524)* | 0.229 (0.353) | 0.318 (0.447) | Corruption squared ki2 | -1.868 (0.948)** | -1.891 (0.927)** | -1.182 (0.795) | -1.576 (1.401) | Controls | Yes | Yes | Yes | Yes | N | 295 | 295 | 250 | 250 | Pseudo R2 | 0.1276 | 0.1522 | 0.2717 | 0.1821 | Wald/F-test (p-value) | 43.67 (0) | 4.36 (0) | 40.93 (0) | 1.26 (0.19) |
Dependent variable: Tax rate (ti) | (1) | (2) | (3) | (4) | W/S ratio | -0.051 (0.016)*** | -0.039 (0.016)** | -0.041 (0.018)** | -0.023 (0.019) | Corruption index | 0.053 (0.016)*** | 0.034 (0.015)** | 0.030 (0.015)** | 0.029 (0.014)** | Size of gov coalition | | | 0.005 (0.002)*** | 0.004 (0.002)** | Mayor majority | | | -0.012 (0.015) | -0.007 (0.016) | EPI | | | 0.003 (0.012) | 0.011 (0.012) | Mayor gov | | | -0.004 (0.005) | -0.005 (0.005) | HDZ vote share | | | 0.022 (0.023) | 0.013 (0.025) | SDP vote share | | | -0.017 (0.03) | -0.021 (0.03) | Unemployment | | 0.084 (0.024)*** | 0.063 (0.027)** | 0.046 (0.031) | Income p/c | | 3.05x10-5 (5.87x10-6)*** | 3.11x10-5 (6.13x10-6)*** | 1.88x10-5 (8.2x10-6)** | Grants p/c | | -2.37x10-6 (1.7x10-6) | -2.59x10-6 (1.7x10-6) | 3.72x10-7 (1.8x10-6) | Controls | No | No | No | Yes | N | 546 | 546 | 546 | 546 | R2 | 0.0442 | 0.0958 | 0.1208 | 0.1513 | F-test (p-value) | 11.62 (0) | 10.37 (0) | 6.19 (0) | 5.75 (0) |
Note: OLS regressions performed throughout. Control variables include the municipality and city specific controls: Croats, Average age, Years of education, War disabled, Settlement size, and Assembly size. Standard errors are robust to heteroskedasticity. *** denotes significance at 1%, ** at 5%, and * at 10%.
| (1) PS matching | (2) NN matching | (3) Radius matching | (4) Kernel matching | Impact of W/S on tenure (Ti) | -0.987 (0.440) ** | -0.543 (0.32)* | -0.644 (0.338)* | -0.669 (0.302)** | R2 | 0.3059 | 0.2221 | 0.2144 | 0.2430 | F-test (p-value) | 12.9 (0) | 13.09 (0) | 10.29 (0) | 13.89 (0) | Impact of W/S on corruption (ki) | -0.0558 (0.038) | -0.0526 (0.026)** | -0.0367 (0.028) | -0.046 (0.026)* | R2 | 0.0846 | 0.088 | 0.0713 | 0.0912 | F-test (p-value) | 1.85 (0.04) | 2.56 (0) | 2.59 (0) | 2.67 (0) | Impact of W/S on tax rates (ti) | -0.0102 (0.005) * | -0.0086 (0.004)** | -0.0097 (0.003)** | -0.0099 (0.003)*** | R2 | 0.1855 | 0.1290 | 0.0962 | 0.1168 | F-test (p-value) | 4.85 (0) | 3.81 (0) | 4.25 (0) | 4.29 (0) | Controls | Yes | Yes | Yes | Yes | N | 257 | 484 | 546 | 537 |
| (1) Entropy balancing | (2) Propensity score matching | (3) Unmatched sample | Impact of W/S on tenure (Ti) | -0.857 (0.275)*** | -0.987 (0.440)** | -0.62 (0.30)** | R2 | 0.2519 | 0.3059 | 0.2018 | F-test (p-value) | 23.88 (0) | 12.9 (0) | 20.49 (0) | Impact of W/S on corruption (ki) | -0.0602 (0.030)** | -0.0558 (0.038) | -0.054 (0.026)** | R2 | 0.0856 | 0.0846 | 0.0752 | F-test (p-value) | 3.09 (0) | 1.85 (0.04) | 5.21 (0) | Impact of W/S on tax rates (ti) | -0.012 (0.004)*** | -0.0102 (0.005)* | -0.0097 (0.037)** | R2 | 0.184 | 0.1855 | 0.1245 | F-test (p-value) | 3.51 (0) | 4.85 (0) | 6.45 (0) | Controls | Yes | Yes | Yes | N | 546 | 257 | 546 |
Note: The first column reports the estimates of the three given relationships after entropy balancing, the second replicates the same results for propensity score matching from column 1 in table 6, and the final are OLS estimates from an unmatched sample reported in column 4 of tables 2, 3 and 5. The full list of control variables is the same as in column 4 of tables 2 and 3. Standard errors are robust to heteroskedasticity. *** denotes significance at 1%, ** at 5%, and * at 10
Variable | Description | Source | W/S ratio | Winning coalition divided by the entire selectorate (votes for incumbent divided by all eligible voters) | State Electoral Commission of the Republic of Croatia | Corruption index | Weighted average of all the given proxies of corruption defined through various cases of potentially fraudulent public procurements | Vukovic (2017), based on interviews with key stakeholders in the procurement process. Source of procurements: Official Gazette of the Republic of Croatia | Tax rate (prirez) | Local tax surcharge rate on income tax | Ministry of Finance, Tax Administration | Re-election | =1 when incumbent mayor gets re-elected, =0 otherwise | State Electoral Commission of the Republic of Croatia | Years in power | Total years in power until 2013 | State Electoral Commission of the Republic of Croatia | Turnout | Municipality-level turnout in the 2013 local election | State Electoral Commission of the Republic of Croatia | HDZ vote share | Proportion of municipal vote for the HDZ in the 2011national election | State Electoral Commission of the Republic of Croatia | SDP vote share | Proportion of municipal vote for the SDP in the 2011national election | State Electoral Commission of the Republic of Croatia | Mayor for government | = 1 when mayor from the same party as the national government; = 0 otherwise | Glaurdić and Vuković (2017); source of original data: State Electoral Commission of the Republic of Croatia | EPI | Electoral polarization index, based on municipality-level results in the directly preceding national election | Glaurdić and Vuković (2017); source of original data: State Electoral Commission of the Republic of Croatia | Size of governing coalition | Number of seats the governing coalition has in the local assembly | Glaurdić and Vuković (2017); source of original data: State Electoral Commission of the Republic of Croatia | Mayor majority | Proportion of deputies in the local council supporting the mayor | Glaurdić and Vuković (2017); source of original data: State Electoral Commission of the Republic of Croatia | Unemployment | Average monthly unemployment rate | Croatian Unemployment Bureau | Income | Income per capita (deflated to 2010 levels), natural log transformed | Croatian Bureau of Statistics | Grants | Per capita grants (deflated to 2010 levels), natural log transformed | Ministry of Finance | Croats | Proportion of population ethnically Croatian | Croatian Bureau of Statistics | Average age | Average age for entire population in municipality | Croatian Bureau of Statistics | Years of education | Average years of education for population older than 15 years of age | Croatian Bureau of Statistics | War disabled per 1000 | Number of disabled persons whose disability was caused by war | Glaurdić and Vuković (2016); source of original data: Croatian Bureau of Statistics | Settlement size | Weighted average of settlement size in a municipality as a measure of urban-rural cleavage | Glaurdić and Vuković (2016); source of original data: Croatian Bureau of Statistics | Assembly size | Total number of representatives in the local assembly | State Electoral Commission of the Republic of Croatia |
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December, 2017
IV/2017
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