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Politicians' Outside Earnings and Political Competition

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Author Info

  • Becker, Johannes

    ()
    (University of Oxford)

  • Peichl, Andreas

    ()
    (ZEW Mannheim)

  • Rincke, Johannes

    ()
    (University of Erlangen-Nuremberg)

Abstract

This paper deals with the impact of electoral competition on politicians' outside earnings. In our framework, politicians face a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The main hypothesis is that the amount of time spent on outside work is negatively related to the degree of electoral competition. We test this hypothesis using a new dataset on outside earnings of members of the German federal assembly. Taking into account the potential endogeneity of measures of political competition that depend on past election outcomes, we find that politicians facing low competition have substantially higher outside earnings.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3902.

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Length: 22 pages
Date of creation: Dec 2008
Date of revision:
Publication status: published in: Public Choice, 2009, 140 (3-4), 379 - 394
Handle: RePEc:iza:izadps:dp3902

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Related research

Keywords: outside earnings; political competition; political rents;

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References

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  1. Stefano Gagliarducci & Tommaso Nannicini & Paolo Naticchioni, 2007. "Outside income and moral hazard : the elusive quest for good politicians," Economics Working Papers we073218, Universidad Carlos III, Departamento de Economía.
  2. Gagliarducci, Stefano & Nannicini, Tommaso & Naticchioni, Paolo, 2008. "Electoral Rules and Politicians’ Behavior: A Micro Test," IZA Discussion Papers 3348, Institute for the Study of Labor (IZA).
  3. Poutvaara, Panu & Takalo, Tuomas, 2007. "Candidate quality," Munich Reprints in Economics 19785, University of Munich, Department of Economics.
  4. Becker, Johannes & Peichl, Andreas & Rincke, Johannes, 2007. "Politicians' outside earnings and electoral competition," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 08-3, University of Cologne, FiFo Institute for Public Economics.
  5. Torsten Persson & Guido Tabellini, 1998. "The Size and Scope of Government: Comparative Politics with Rational Politicians," NBER Working Papers 6848, National Bureau of Economic Research, Inc.
  6. Messner, Matthias & Polborn, Mattias K., 2004. "Paying politicians," Journal of Public Economics, Elsevier, vol. 88(12), pages 2423-2445, December.
    • Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  7. Panu Poutvaara & Tuomas Takalo, 2003. "Candidate Quality," CESifo Working Paper Series 1106, CESifo Group Munich.
  8. Antonio Merlo & Andrea Mattozzi, 2005. "Political Careers or Career Politicians?," 2005 Meeting Papers 740, Society for Economic Dynamics.
  9. Daniel Diermeier & Michael Keane & Antonio Merlo, 2004. "A Political Economy Model of Congressional Careers," Discussion Papers 1387, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems And Public Spending," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 609-657, May.
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