Do electoral incentives affect immigration policies? I study this question in the setting of Italian municipalities making decisions about the reception of refugees. The localized control of the reception policy, combined with the exogenous timing of policy decisions and staggered elections, enables me to study the effect of electoral incentives on the reception of refugees. Although municipalities receive fiscal grants for hosting refugees, electoral incentives reduce the probability of opening a refugee centre by 24 per cent. The results suggest that electoral incentives may induce politicians to make decisions that are potentially detrimental from an economic perspective.

Does refugee reception lead to more hate crimes against foreigners? What is the impact of refugee reception on extreme-right voting and which role does the media play in the transmission? Using data on Italian SPRAR refugee centres we show that the reception of refugees across Italian municipalities leads to a decrease in extreme-right voting and hate crimes against foreigners. We analyze which role media coverage can play in the transmission. Using an instrumental variables approach, we find that the for the average assignment of 15 refugees per municipality the growth in vote shares for the extreme-right parties is decreased by 12.5 percentage points, which amounts to 2.25 percentage points looking at differences in vote shares. We also find that the hosting of 50 refugees leads to a reduction of about one hate crime over the period between 2013 and 2017. The effect on extreme voting is mainly driven by municipalities where local newspapers are less biased against migrants, where sport newspapers distribution is lower and where the local population has lower misperceptions of the presence of migrants.

In a model of politics with different types of politicians, following a tax decentralization reform, politicians with high administrative skills are elected in rich municipalities and politicians with high political skills are elected in poor municipalities. As a result, voter welfare increases only, or mainly, in rich municipalities. These results provide a different rationale for the observed poor perfomance of local governments largely financed by grants. We test these predictions by exploiting the decentralization reforms in Italy in the 90's. These reforms introduced the direct election of the mayor and new autonomous tax tools, that affected differently rich and poor municipalities because of the differences in their tax bases. Results support our predictions and are robust to several alternative stories.

Many countries have recently introduced fiscal rules to constrain governments’ fiscal policies and action. Despite the wide adoption, there is little evidence on the consequences of fiscal rules for the quality of government. I use data from Italian municipalities to study how fiscal rules affect the selection of politicians. In 1999, the Italian government applied fiscal rules to all municipalities, and in 2001 it removed them for municipalities with less than 5000 inhabitants. Using a Difference-in-Discontinuity (Diff-in-Disc) design, which enables control for an institutionally mandated increase in the wage paid to politicians at the 5000-inhabitant threshold, I provide the following empirical evidence: 1) fiscal rules negatively affect the quality of politicians, and in particular their level of education; 2) consistent with the idea that competent individuals enter politics if they are given enough discretion, the effect is driven by municipalities with low deficits; 3) fiscal rules offset the positive effect of the wage increase on the selection of politicians.

Recently several countries have experienced a drop in popularity of national political parties, accompanied by the success of independent movements (e.g. Civic Lists in Italy). I exploit the success of Civic Lists in Italian municipalities and use them as a comparison group for party-affiliated politicians, to test whether national parties affect fiscal discipline. In particular, using a Regression Discontinuity Design (RDD), I show that party-affiliated mayors are more fiscally responsible: they run lower deficits, accumulate less debt and reduce expenditures. The effect is significant only for municipalities not constrained by fiscal rules. This suggests that national parties act as a substitute for fiscal rules in constraining politicians. Besides that, I provide evidence that the discipline of party-affiliated politicians is linked to better career prospects: party-affiliated mayors have a higher probability of being re-elected and better chances of being promoted to higher levels of government. Finally, the results are not driven by political orientation, alignment with the central government, the presence of criminal organisations nor by unobserved political ability.