Swedish Electonomics: The Electoral Consequences of Local Government Performance

Sammanfattning: This paper seeks to investigate whether Swedish voters hold their local governments accountable for their performance while in office, i.e. whether they act retrospectively in municipal elections. Utilizing incumbent coalition vote shares in the quadrennial Swedish elections during the period of 1998-2014 and using a first-difference method we find that only tax changes have a significant effect on electoral results, with tax hikes resulting in a lower share of the vote for incumbents in the next election. This effect seems to be driven by the mix-rule municipalities, i.e. those with incumbent coalitions containing parties from both sides of the ideological divide. Our results also indicate that voters act myopically as tax changes are increasing in significance with proximity to elections. Further, it is hypothesized that there is a lack of awareness among voters of local government performance and that voters hold incumbents accountable for changes in the municipal tax rate due to it being the most visible indicator of incumbent performance.