Dong-Won Lee

Abstract Critics opine that social capital, despite its importance, provides little empirical insight because it is difficult to measure. This paper develops a broad measure of social capital, incorporating four major components: social trust, norms, social networks, and social structure. We constructed an index of social capital for 72 countries by extracting the principal components from 44 variables. Consistent with the social capital literature, the index of social capital is significantly a

This paper examines the claim that the adoption of a value-added tax (VAT) increases the size of government. Our analysis suggests that introducing the VAT, despite the fact that it is a relatively efficient tax in comparison to the income tax alternative, has little impact on government growth due to two factors: (1) the substitution of the VAT for other tax sources, and (2) the low price elasticity of demand for public goods. In contrast, demand-side changes may have a more significant impact

We revisit the claim that ethnic heterogeneity—the degree to which different ethnic groups make up the population—reduces local government spending on various public goods. Our analysis suggests that heterogeneity does not necessarily reduce local public spending due to two factors: (1) the low price elasticity of demand for local public goods and (2) the substitution between public goods. Using data from American cities and school districts from 2000 to 2010, we find that ethnic heterogeneity h

This article examines the paradox that a supermajority rule in a legislature promotes excessive government spending. We propose a simple conjecture: If rent‐seeking coalitions dominate legislative politics and if individual legislators' demands for rent‐seeking activities are price‐inelastic, a change of legislative rules from simple majority to a supermajority will lead to greater public spending, other things equal. Using data from U.S. state legislatures, 1970 to 2007, we find that the adopti

This paper investigates the missing link between multi-dimensional components of social capital and the size of the shadow economy, an association generally considered to be ambiguous. A simple agency model shows that social capital and the shadow economy are connected through a mechanism reducing the perceived level of corruption. Using a sample of 65 countries, 1999 to 2007, the paper finds that social trust, social norms (e.g. tax morale), and a broad index of social capital are robust, negat

In the authors' political equilibrium model, regulation is considered an implicit and regressive tax-equivalent alternative to the common and less regressive fiscal alternatives: income, property, and sales taxes. The authors hypothesize that in more heterogeneous jurisdictions the state relies more on regulation and less on budgetary spending than in more homogeneous units. Using data drawn from U.S. state-level environmental policy from 1980 to 1994, the authors confirm this hypothesis.

This paper revisits the claim that members of legislative committees direct more earmark spending to their constituents. In South Korea's legislature, a national law regulating the budget committee provides an unusual source of exogenous variation in membership: members of the committee are rotated each year owing to 1‐year term limits. Using data from 226 local governments, and both within‐district and within‐member variations in membership, we find that districts represented by a budget commit

This paper analyzes the factors influencing whether individuals have delegative democratic attitudes (i.e. supporting strong executive power with little oversight from the legislature). Roughly up to 50% of voters in East Asia have delegative democratic attitudes, which are known to undermine democratic governance in new democracies. Understanding delegative democratic attitudes is thus closely linked to the question of why delegative democracy persists. Our theoretical analysis suggests that de