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Money, Political Ambition, and the Career Decisions of Politicians

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Author Info
Michael P. Keane () (Department of Economics, Arizona State University)
Antonio Merlo () (Department of Economics, University of Pennsylvania)

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Abstract

In this paper we assess the impact of a variety of policies that may influence the career decisions of members of the U.S. Congress, using the empirical framework of Diermeier, Keane and Merlo (2005). These policies alter incentives to run for re-election, run for higher office or leave Congress, by altering wages, nonpecuniary rewards and career prospects (both in and out of Congress). We find that reducing the relative wage of politicians would substantially reduce the duration of congressional careers. Notably, however, the effect varies considerably across different types of politicians. A reduction in the congressional wage would disproportionately induce exit from Congress by “skilled” politicians, Democrats, politicians who were relatively young when first elected, and those without pre-congressional political experience. Interestingly, however, it would not cause the type of politicians who most value legislative accomplishments (“achievers”) to disproportionately exit Congress. Thus, wage reductions would not reduce the “quality” composition of Congress in this sense. Term limits also have similar effects on achievers and non-achievers. However, we find that term limits would disproportionately induce members of the majority party to exit Congress. This has the interesting implication that term limits make it more difficult to sustain substantial congressional majorities over time. We do find three types of policies that disproportionately induce nonachievers to leave Congress: (i) elimination of seniority as a determinant of key committee assignments, (ii) restricting private sector employment after leaving Congress, and (iii) reducing the seniority advantage in elections.

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Publisher Info
Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 07-016.

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Length: 51 pages
Date of creation: 01 May 2007
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Handle: RePEc:pen:papers:07-016

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Related research
Keywords: politicians political careers monetary and non-monetary incentives U.S. Congress

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Mattozzi, Andrea & Merlo, Antonio, 2007. "Political Careers or Career Politicians?," CEPR Discussion Papers 6164, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Caselli, Francesco & Morelli, Massimo, 2004. "Bad politicians," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 759-782, March. [Downloadable!] (restricted)
    Other versions:
  3. Daniel Diermeier & Michael Keane & Antonio Merlo, 2002. "A Political Economy Model of Congressional Careers," PIER Working Paper Archive 04-037, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2004. [Downloadable!]
    Other versions:
  4. Tim Groseclose & Jeffrey Milyo, 1999. "Buying the Bums Out: What's the Dollar Value of a Seat in Congress?," Discussion Papers Series, Department of Economics, Tufts University 9923, Department of Economics, Tufts University. [Downloadable!]
  5. Ernesto Dal Bo & Pedro Dal Bo & Jason Snyder, . "Political Dynasties," Working Papers 2006-15, Brown University, Department of Economics. [Downloadable!]
    Other versions:
  6. Messner, Matthias & Polborn, Mattias K., 2004. "Paying politicians," Journal of Public Economics, Elsevier, vol. 88(12), pages 2423-2445, December. [Downloadable!] (restricted)
    Other versions:
    • Matthias Messner & Mattias Polborn, . "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
  7. Antonio Merlo, 2005. "Whither Political Economy? Theories, Facts and Issues," PIER Working Paper Archive 05-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael P. Keane & Kenneth I. Wolpin, . "Empirical Applications of Discrete Choice Dynamic Programming Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics. [Downloadable!] (restricted)
  2. Ferraz, Claudio & Finan, Frederico, 2008. "Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance," IZA Discussion Papers 3411, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Gagliarducci, Stefano & Nannicini, Tommaso & Naticchioni, Paolo, 2008. "Outside Income and Moral Hazard: The Elusive Quest for Good Politicians," IZA Discussion Papers 3295, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Andrea Mattozzi & Antonio Merlo, 2007. "Political Careers or Career Politicians?," NBER Working Papers 12921, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Andrea Mattozzi & Antonio Merlo, 2005. "Political Careers or Career Politicians? Second Version," PIER Working Paper Archive 07-009, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 07 Feb 2007. [Downloadable!]
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