Choosing not to lead: Monetary incentives and political selection in local parliamentary systems

Using a rich database covering all local politicians in Italian municipalities, we implement a regression-discontinuity analysis to evaluate the causal effect of monetary incentives on political selection in local parliamentary systems. We find that higher expected wages lead to the selection of more educated council members and executives, but do not result into better educated mayors. Low-wage councils tend to elect mayors with almost two years more schooling than the median councillor, but this difference vanishes in high-wage councils. We rationalize this finding in a model where better educated councillors shy away from better-paid but full-time positions (such as mayor) and prefer less-paid but part-time positions (executives) that allow them to devote more time to work while in office. An analysis by politicians’ occupation and retirement status supports this explanation. Our findings thus highlight that the effects of monetary incentives are not invariant across different institutional settings, especially when the election systems include a parliamentary stage.