Binding Ties, Binding Commitments: Evidence from Public-Private Partnerships in Vocational Education
Work on the political economy of investment emphasizes the importance of credible commitments between the firms and the state for developmental outcomes. How can credible commitment be generated in environments characterized by pervasive state-led violence, expropriation, and weak constraints on officials? This paper explores this question through the lens of public-private partnerships in vocational education in Russia’s regions. Research on Europe and the OECD cases emphasizes a strong civil society, such as strong workers’ and employers’ associations, along with free-markets overseen by a well-constrained state, as crucial to fostering credible commitments between firms and the state that allow for cooperative co-investment in vocational education. Yet in many Russian regions, cooperative efforts in vocational education have emerged despite weak employer associations and unions; poorly functioning market institutions; and weak institutions that enable pervasive state corruption and violent predation. In this paper, I argue that in the absence of strong formal institutions, personal ties between state officials and businesses allow firms to acquire information about potential partners within the state bureaucracy and punish low-level officials for breaching agreements and engaging in rent-seeking. This mechanism creates commitment mechanisms between well-connected firms and the state that allow for co-investment. The state in turn uses its powers of contract enforcement to insure that firms do not free-ride on cooperative institutions, creating credibility between firms. To test this theory I take advantage of an original dataset of all public-private partnership contracts between Russian firms and public vocational education institutions for 2013. Drawing on a separate dataset of all Russian firms, I match firms that participate in public-private partnerships to non-participants to create a sample for analysis. I use a unique database of biographical information on regional executives, legislators, and firm officers in the sample to trace their shared work histories, birthplaces, and education and establish connections. This work has important implications for the literature on vocational education and public-private partnerships, as well as for research on business-state relations and investment in violent, weakly institutionalized settings.
The Foundations of Social Policy Support: Experimental Evidence on How Institutional Quality Affects Redistributive Preferences
with Sarah Wilson Sokhey (University of Colorado-Boulder)
We examine how variation in institutional quality—specifically tax evasion—influences individuals’ support for redistributive policies. While much is known about preferences for social policy, there is less research examining how institutions condition these preferences. To address this, we conduct laboratory experiments in the USA at the University of Colorado and in Russia at the Higher School of Economics. In our experiment, individuals vote on a tax rate which contributes to a common pot, complete a clerical task (or are randomly assigned to be unemployed), and then receive payment based on how well they complete the task and their portion of the common pot which is distributed equally. Participants play 3 rounds and vote on their preferred tax rate at the beginning of each round after being updated with information about their own productivity relative to the average and, when relevant, how prevalent underreporting is. In one version, participants are not allowed to cheat by underreporting their earnings. In the other versions, participants may underreport their earnings with either the same risk of audit across individuals or a variable risk of audit across individuals. This research design allows us to test our expectation that individual productivity and the risk of being caught interact to influence a person’s preference for redistribution (as captured by her preferred tax rate). Our research offers valuable contributions to existing work by considering how and to what extent institutional quality influences individual preferences for social policies. To our knowledge, this is the first experiment to examine this question.