We provide a theoretical and empirical assessment of why local fiscal autonomy can affect the skills of elected officials in sub-national governments. We first develop a model of politics with different types of politicians and show that -- following a tax decentralization reform increasing local fiscal autonomy -- politicians with high administrative skills are elected in rich jurisdictions while politicians with high political skills are elected in poor ones. As a result, voter welfare increases only, or mainly, in rich jurisdictions. We then look for empirical support to these predictions by exploiting the decentralization reforms affecting Italian municipalities in the '90s. These reforms introduced both the direct election of the mayor and new autonomous tax tools for municipalities characterized by large differences in their tax bases. Our estimates -- robust to several alternative stories -- emphasize a differential change in elected officials at the municipal level between rich and poor jurisdictions. These findings provide a new explanation for the observed poor performance of local governments largely financed by grants.

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. 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, 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. Alternative stories find less support in the data.

Fiscal rules, i.e., constraints to the policymaking discretion of elected officials in terms of deficit and expenditures, are widely used tools to regulate fiscal policies. This paper shows that they can negatively affect the quality of candidates willing to run for office. We build a simple model that combines fiscal rules with endogenous entry into politics. The model shows that fiscal rules negatively affect the share of high education politicians willing to run for office when the share of politicians biased in favor of public spending is sufficiently low. We test the predictions of the model using data from Italian municipalities and a difference-in-discontinuity design. Consistent with the model, the empirical analysis shows that fiscal rules negatively affect politicians’ education and that municipalities where our proxy for politicians’ pro-spending bias is low drive the results. These results highlight a new "general equilibrium" effect of fiscal rules. Reducing policymaking discretion may alleviate inter-jurisdictional externalities and pork-barrel spending. However, it may also lower the political class’s quality.

Institutions matter for the political choice of policies. We study, theoretically and empirically, how different electoral systems affect the immigration policy of a country or city, zooming on the labor market as the main source of heterogeneous economic preferences on immigration. The general result is that a polity is more open to immigration the less likely it is that policymaking can be supported by a plurality of voters who do not constitute the absolute majority. There is evidence for this result at all levels in terms of correlations, and we establish causality via regression discontinuity design for the Italian case.

Large migrant inflows have spurred anti-immigrant sentiment, but can small inflows have a different impact? We exploit the redistribution of migrants after the dismantling of the ``Calais Jungle" in France to study the impact of the exposure to few migrants. Using instrumental variables, we find that in the presence of a migrant center (CAO), the growth rate of vote shares for the main far-right party (Front National (FN), our proxy for anti-immigrant sentiment) between 2012 and 2017 is reduced by about 11.9 percentage points. Given that FN vote shares increased by 20\% on average between 2012 and 2017, this estimation suggests that the growth rate of FN votes in municipalities with a CAO was only 40\% compared to the increase in municipalities without a CAO (which corresponds to a 3.9 percentage points lower increase). These effects, which crucially depends on the inflow's size, point towards the contact hypothesis (Allport 1954).

How does the reception of refugees affect the electoral performance of extreme-right parties? Does the effect change across areas with heterogeneous access to broadband internet? Using data on Italian refugee centers and an instrumental variable approach based on pre-existing group accommodation buildings, we show that hosting refugees leads to a decrease in extreme-right parties' vote shares. We estimate that municipalities that opened a refugee center between the 2013 and the 2018 national elections experienced a change in the votes shares of extreme-right parties approximately 7 percentage points lower than municipalities that did not open a refugee center. The negative effect is stronger for municipalities that opened smaller refugee centers and with lower access to broadband internet.

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, I find that the probability of opening a reception centre is 24 per cent lower for municipalities in the final year of the electoral term (i.e. just before new elections), compared to municipalities in other years of the term. The results suggest that electoral incentives may induce politicians to make decisions that are potentially detrimental from an economic perspective.

Why do anti-immigrant political parties have more success in areas that host fewer immigrants? Using regression discontinuity design, structural breaks search methods and data from a sample of Italian municipalities, we show that the relationship between the vote shares of anti-immigrant parties and the share of immigrants follows a U-shaped curve, which exhibits a tipping-like behavior around a share of immigrants equal to 3.35 %. We estimate that the vote share of the main Italian anti-immigrant party (Lega Nord) is approximately 6 % points higher for municipalities below the threshold. Using data on local labor market characteristics and on the incomes of natives and immigrants, we provide evidence which points at the competition in the local labor market between natives and immigrants as the more plausible explanation for the electoral success of anti-immigrant parties in areas with low shares of immigrants. Alternative stories find less support in the data.