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.

Do electoral incentives affect immigration policies? Our model shows that politicians manipulate immigration policies for electoral reasons, and their behavior depends on the share of anti-immigrant voters and the level of electoral competition. Exploiting the Italian system for refugees' reception, we empirically show that electoral incentives reduce the probability of bidding for a refugee center by 24%, despite the economic benefits arising from these centers. High shares of extreme-right voters and low levels of electoral competition drive the effect. The results explain why it is difficult to reach an equal redistribution of refugees across and within countries.

We use data from Italy to study the political and social impact of a refugee reception policy (SPRAR) directly managed by local governments, whose features recall the conditions of the contact theory (Allport, 1954). Instrumental variables estimates indicate that municipalities that opened a refugee center between the 2013 and 2018 national elections experienced a change in the vote shares of extreme-right parties approximately 7 percentage points lower compared to towns that did not open a refugee center. We document that the positive impact of SPRARs on “compositional amenities” (i.e., local schools) and population growth allows explaining the negative impact on anti-immigrants’ prejudice. Finally, we provide evidence of spillovers in prejudice reduction in neighboring municipalities without a SPRAR.

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, which we estimate using difference-in-differences and 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 antiimmigrant sentiment) between 2012 and 2017 is reduced by about 12 percentage points. This effect, which crucially depends on the inflow’s size, points towards the contact hypothesis (Allport, 1954).

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.

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.