- Political economy, public finance and applied microeconomics
- S. Galletta, Law enforcement, municipal budgets and spill-over effects: Evidence from a quasi-experiment in Italy (2017) Journal of Urban Economics, Media Coverage: la7, lavoce.info, ilfattoquotidiano.it,
In this paper, I empirically investigate the presence of spillover effects resulting from the strengthening of law enforcement against corruption in local governments. Specifically, I take advantage of an Italian law that empowers the central government to replace democratically elected municipal officials who are potentially connected with the mafia with a commission of non-elected administrators. Fixed-effects model estimates that focus on a sample of municipalities from three Italian regions (Campania, Calabria and Sicilia) for the period 1998 to 2013 show that in municipalities where the city council is dismissed because of the presence of mafia-connected officials, there is a reduction in public investments in neighboring municipalities. Additional empirical evidence suggests that this reduction may be because law enforcement spillovers reduce misconduct in neighboring municipalities.
- S. Galletta and A. Redonda, “Corporate Flat Tax Reforms and Businesses’ Investment Decisions: Evidence from Switzerland” (2017), International Tax and Public Finance
This paper focuses on the effects of a corporate income flat tax reform on businesses’ investment decisions. Since 1990, several Swiss states (cantons) have been switching from a graduated to a flat tax rate scheme on profits. The paper assesses the effects of such a reform both on the number of establishments (i.e. extensive margin of investment) and on the number of employees (i.e. intensive margin) in a given jurisdiction by computing a difference-in-differences estimation. Our results suggest that the introduction of a flat tax reform on corporate income taxes has a negative and statistically significant impact on both margins of investment. Moreover, the effect is considerably larger for riskier firms, suggesting that progressive taxation acts as an insurance effect for risk-averse entrepreneurs.
- S. Galletta, “On the determinants of happiness: a Classification And Regression Tree (CART) approach” (2016), Applied Economics Letters
This article studies the determinants of the individual’s subjective well-being by applying a classification and regression tree (CART) analysis to data from the Survey on Household Income and Wealth (SHIW) provided by the Bank of Italy. The results support the primary importance of economic conditions but show that their effect is heterogeneously dependent on other individual characteristics.
- S. Galletta and M. Jametti, “How to Tame Two Leviathans? Revisiting the effect of direct democracy on local public expenditure in a federation” (2015), European Journal of Political Economy
We explore how the presence of direct democracy across hierarchical levels of government in a federation affects the level of public expenditure. In so doing we revisit the effect of direct democratic institutions on public policies. Particularly, we are interested whether the effect of upper-level (state) direct democratic institutions on lower-level expenditure varies with lower-level direct democracy. Empirically, we exploit the large institutional variation in the degree of direct democracy both for state (cantons) and local governments (municipalities) in Switzerland. Considering 119 municipalities belonging to 22 cantons for the period 1993–2007, we find that the cantonal fiscal referendum increases local spending for those municipalities without fiscal referenda, while this effect is significantly reduced for municipalities that also avail of referenda. This suggests that upper-level fiscal restraint can be undone by lower-level profligacy if direct-democratic control is limited to the upper level.
- S. Galletta, M. Jametti, and A. Redonda, “Highway to Economic growth? Competition in public works tenders in the Democratic Republic of Congo” (2015), South African Journal of Economics
The Democratic Republic of Congo (DRC) is one of the poorest countries in the world. The construction sector will play an essential part to bring the country on the path of economic growth, and competition within the sector is crucial to achieve this goal. In this paper, we analyse the effect of competition in public works tenders in the DRC, using a unique and newly assembled database on public works contracts. We find that the number of participating bidders significantly reduces contract prices, confirming our prior hypothesis that competitive pressure can enhance the overall performance of the sector. Further, we account for the possibility of heterogeneous tender participants, finding that the competition effect can vary with the degree of bidders’ heterogeneity.
- G. Daniele , S. Galletta and B. Geys “Abandon Ship? Party Brands and Politicians’ Responses to a Political Scandal” (2017), IdEP Economic Papers n. 1703
How do politicians react to a political earthquake? In this article, we study politicians’– rather than voters’ – responses to the main political scandal in Italian recent history (Tangentopoli), and overcome endogeneity concerns by analysing the local implications of this national corruption scandal. We find that local politicians withdraw support for incumbents in parties hit by Tangentopoli – inducing early government terminations in such municipalities. Moreover, politicians in parties hit by the scandal exhibit higher rates of party switching and lower re-running rates. By decreasing the value of the party “brand”, scandals thus become transmitted across politicians and levels of government via partisan cues
- F. Cavalcanti, G. Daniele and S. Galletta, “Popularity shocks and political selection: The effects of anti-corruption audits on candidates’ quality” (2016), IdEP Economic Papers n. 1607
We observe that popularity shocks are crucial for electoral accountability beyond their effects on voters’ behaviors. By focusing on Brazilian politics, we show that the disclosure of audit reports on the (mis)use of federal funds by local administrators affects the type of candidates who stand for election. When the audit finds low levels of corruption, the parties supporting the incumbent select less-educated candidates. On the contrary, parties pick more-educated candidates when the audit reveals a high level of corruption. These effects are stronger in municipalities that have easier access to local media.
- S. Galletta, “Direct Democracy, Partial Decentralization and Voter Information: Evidence from Swiss Municipalities” (2015), IdEP Economic Papers n. 1501 R & R Economics and Politics
In this paper, I investigate whether changes in the availability of direct democratic institutions in local jurisdictions affect expenditure decentralization. I collect institutional and public budget information for a panel of 406 Swiss municipalities over the period 1990-2009 and identify 45 of them that either abolished or introduced a mandatory fiscal referendum. Using a difference in differences estimation I find a statistically significant reduction of decentralization when local jurisdictions introduce the mandatory fiscal referendum. To explain this result, I propose a model where citizens benefit from direct democracy because it increases their awareness of governments’ behavior. Under a condition of partial decentralization (i.e., officials from different levels of government share the responsibility for the provision of public goods) direct legislation affects politicians’ electoral incentives which might find it convenient to relocate expenditure where citizens have the lowest control over government actions.
- “The effect of equalization transfers on local authorities’ decisions”
- “Citizens’ preferences and direct democracy”
Conferences and seminars
- 2017 ASSA Chicago, SSES Lausanne, Workshop on Political Economy & Fiscal Federalism Barcelona, Petralia Workshop Siracusa, Seminar EU Commission Joint Research Centre Ispra
- 2016 ZEW Public Finance Conference Mannheim, Workshop on the Economics of Organized Crime Bergamo, IIPF Lake Tahoe, SSES Lugano, Seminar at IAE/UAB Barcelona, Seminar at KOF-ETH Zürich
2015 YSEM Zürich, EPCS Groningen, SIEP Ferrara, CESifo Dresden, Seminar at IEB Barcelona
2014 IIPF Lugano, CPEG Ottawa
2013 CIRANO Fiscal Rules Montreal, CAE Montreal, PCS New Orleans, Seminar at McMaster University Hamilton
2012 SIEP Pavia, SPAN doctoral symposium Berne