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Politicians' Outside Earnings and Political Competition

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  • 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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Keywords: outside earnings; political competition; political rents;

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References

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  1. Andrea Mattozzi & Antonio Merlo, 2006. "Mediocracy," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 07-007, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  2. Daniel Diermeier & Michael Keane & Antonio Merlo, 2002. "A Political Economy Model of Congressional Careers," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 04-037, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2004.
  3. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems And Public Spending," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 117(2), pages 609-657, May.
  4. 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.
  5. Andrea Mattozzi & Antonio Merlo, 2005. "Political Careers or Career Politicians?," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 05-032, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005.
  6. Panu Poutvaara & Tuomas Takalo, 2007. "Candidate quality," International Tax and Public Finance, Springer, Springer, vol. 14(1), pages 7-27, February.
  7. Johannes Becker & Andreas Peichl & Johannes Rincke, 2009. "Politicians’ outside earnings and electoral competition," Public Choice, Springer, Springer, vol. 140(3), pages 379-394, September.
  8. Persson, Torsten & Tabellini, Guido, 1998. "The size and scope of government: Comparative politics with rational politicians," Seminar Papers, Stockholm University, Institute for International Economic Studies 658, Stockholm University, Institute for International Economic Studies.
  9. Stefano Gagliarducci & Tommaso Nannicini & Paolo Naticchioni, 2007. "Electoral Rules And Politicians' Behavior: A Micro Test," Working Papers, CEMFI wp2007_0716, CEMFI.
  10. Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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