Budget Structure and Reelection Prospects: Empirical Evidence from French Local Elections

The literature on sub-national elections reveals that politicians can influence voters with the instruments they can use at this level, particularly the repartition of budgets between investment and operating expenditures, and the number of public employees. Veiga and Veiga (2007), for Portugal, show that increases in investment expenditures and changes in the composition of spending favoring highly visible items are associated with higher vote percentages for incumbent mayors. Sakurai and Menezes-Filho (2008), for Brazil, show that mayors who spend more during their terms of office increase the probability of their own reelection. For France, Dubois and Paty (2009) show that voters sanction their incumbent if their own local housing tax is high compared to their close geographical neighbors. This paper builds on this emerging literature to check the influence of the local budget structure on incumbents' results and reelection prospects. We look at the French local (municipal) elections of 2001 and 2008. The French case is interesting in itself given its specific legal framework and the (induced) multiparty political arena. Moreover, with fixed election dates being called exogenously (from the perspective of the local politician), an endogenous bias is removed. The paper brings two contributions to the literature. First, the empirical methodology permits to identify specific determinants for the first and the second rounds of the electoral process. In the first round, the incumbent faces three possibilities (reelection, defeat or standing again in the second ballot) while, if the incumbent has to stand again at the second ballot, there are two possibilities for him: reelection or defeat. The second feature, and additional contribution of the paper, is that we proceed in two steps. The first step considers the number of votes of the incumbents, while the second focuses on the probability of being reelected. The determinants of the share of votes a candidate receives may be different from the ones for the probability of being reelected. To our knowledge, the potential differences between the two are rarely acknowledged, if at all, in the literature. We first show that municipal budget structure has an impact on both the result of the incumbent's party and the probability of reelection. Notably, operating expenditures have a significant negative impact on the first round, both on the incumbent's result and on her probability of being reelected in the first round. Equipment spending plays a positive role on the incumbent party's share of votes, but has not on the probability of being reelected in the first round. As for political variables, an interesting result is that the number of competing candidates in the first round both reduces the probability of the incumbent being reelected in the first round and her probability of being defeated in the first round. The fact that the incumbent and the majority in Parliament belong to the same party tends to reduce the incumbent's share of vote and her probability of being reelected. Finally, local economic variables only come into play in voters’ minds in the first round of the 2008 election.