Electoral systems and economic growth

Abstract

Electoral systems are rules through which votes translate into seats in parliament. The political economy literature tells us that alternative electoral systems can generate different distributions of power among different social groups in the legislature and therefore lead to different equilibrium economic policies. On the other hand, we know from the endogenous economic growth literature that economic policy can affect growth. What the literature is lacking is a clear link between electoral systems and economic growth. The main objective of this paper is to establish a connection between them. Two main results emerge from our model. First, electoral systems matter for economic growth. Second, the way in which they matter is not straightforward. A precise ranking of these political institutions in terms of economic growth requires the knowledge of the distribution of people among different social classes in society.