The Effect of Left-Wing Party Control : Evidence from Swedish Local Governments

This study estimates the causal effect of having left-wing majority and left-wing rule on a set of economic and policy outcomes by using panel data of Swedish local governments between 1995 and 2021. A regression discontinuity design is applied to exploit the discontinuous party control change at 50% of the vote share making left-wing majority as good as randomly assigned to observations close to the threshold. The findings suggest an increase in tax revenue, public employment, and immigration when left-wing parties reach power. One important contribution to the literature is that I provide evidence that being in rule is more decisive in terms of economic outcomes than merely achieving majority of mandates. Finally, if the party constellation of left-wing governments leans more to the left, the mentioned effects become greater which conflicts with the median voter theorem