The Power of Parties: Evidence from Close Municipal Elections in Norway

We show that small shifts in representation can affect policy in proportional election systems. Using data from Norway, we find that a larger left-wing party leads to more property taxation, higher childcare spending, and lower elderly care spending, while local public goods appear to be a non-partisan issue. These effects are partly due to shifts in bloc majorities, and partly due to changes in the left-right position of the council, keeping the majority constant. The estimates on spending allocations are rather imprecise, but they are consistent with evidence on politicians' fiscal preferences and patterns in media attention.