Money in Norwegian Politics: How does political representation at the national level affect the funding of local party organizations?

Abstract

Money in Norwegian politics is often perceived as not as prominent as in other countries such as the United States. Is the funding in Norway anything related to the elections? This master thesis examines if there exists a causal relationship between being represented in the Norwegian parliament and an increase in funding to the local political organization that is represented. Funding in this sense is transfers from the other party organizations within the same political party. The unique testing ground in Norway, with annual accounts available for the political parties down to the municipality level, the number of municipalities, and excellent data on the candidates running for parliamentary elections, makes it possible to examine a causal relationship on a local level. We use fixed effect regression and find a positive correlation of .27 between local representation and financial support to the local political organizations in the years after an election. This means that when a local political party organization is represented in parliament, they receive .27 more in funding per eligible voter. This is robust across different controls and fixed effects specifications. This confirms a positive relationship between having representation at the national level and the funding to the local political organizations. To further examine this effect, we use a regression discontinuity design to see if the local political party organizations with marginally elected candidates receive more funds than those who marginally did not. We find that the mean funding for local party organizations is larger for those who marginally got elected. However, the RDD estimates are imprecise, and we cannot conclude if there exists a causal effect for the local party organizations with marginal representation. Overall, there seems to be a positive effect of having national representation for the funding of local party organizations, but not on a marginal level.