Three Essays in Applied Economics

Abstract

The aim of this dissertation is to answer three real life economic questions with the following three chapters. Chapter 1, (joint with Matteo Bobba), deals with the problems of weak instruments in identifying the effects of education on democracy. This chapter shows that when the problems caused by weak instruments are properly considered Education affects Democracy. Chapter 2, (joint with Mario Mariniello), analyzes both theoretically and empirically what are the effects of potential competition on actual competition in public procurement auctions in Italy. A model of endogenous entry in auctions is adapted to inspect the theoretical problem and a regression discontinuity design is exploited to identify the causal effects of advertisement on entry and competition in this market. Chapter 3, (joint with Stefano Gagliarducci), explores the relationship between politics and the functioning of public procurements auctions in Italy. In particular, we use the introduction of the two-limit law in 1993 to identify the causal effect of political longevity in office, longer tenure of the mayors, on several outcomes of the auctions. The channel of discretional renegotiations appear to be the tools to distribute political favors which building entry barrier limits competition at the auction level.