Voting systems and fiscal policy: Evidence from runoff and plurality elections

This paper compares policy outcomes under the runoff voting system and the plurality rule by exploiting the assignment of municipalities in Italy to different voting systems based on a population threshold. Mayors, who are the head of the local political power, are elected using a plurality rule in municipalities having fewer than 15,000 residents, while they are elected using a runoff system in municipalities above the threshold. Regression-discontinuity estimates show that municipalities under the runoff system spend 12 percent more than those under the plurality rule and that additional expenditures are not financed via higher taxation.