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The causes of legal rents extraction: evidence from Spanish municipalities

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  • Bernardino Benito

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  • Francisco Bastida

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  • Ana-María Ríos

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  • Cristina Vicente

    ()

Abstract

This paper analyzes the causes of legal political rent extraction by using a direct measure of it, namely, local top politicians’ wages. In particular, we investigate whether local politicians’ incentives to extract rents by setting their own wages are influenced by the degree of political competition and voter information. We use a sample of the largest Spanish municipalities over the years 2008–2010. The results indicate that weaker political competition and lesser voter information are related to more rent extraction. In an additional analysis, we show that higher wages do not ensure better financial management. These findings confirm that when politicians can set their own salaries, higher wages do not mean better management, but they are just political rents. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Bernardino Benito & Francisco Bastida & Ana-María Ríos & Cristina Vicente, 2014. "The causes of legal rents extraction: evidence from Spanish municipalities," Public Choice, Springer, vol. 161(3), pages 367-383, December.
  • Handle: RePEc:kap:pubcho:v:161:y:2014:i:3:p:367-383
    DOI: 10.1007/s11127-014-0206-y
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    References listed on IDEAS

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    Cited by:

    1. Björn Kauder & Manuela Krause & Niklas Potrafke, 2016. "Electoral Cycles in MPs' Salaries: Evidence from the German States," CESifo Working Paper Series 6028, CESifo Group Munich.
    2. Schötz, Lukas, 2016. "Power and rents - political influence on rent extraction: Quasi-experimental evidence for Bavaria," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-70-16, University of Passau, Faculty of Business and Economics.
    3. repec:eee:pubeco:v:157:y:2018:i:c:p:95-106 is not listed on IDEAS

    More about this item

    Keywords

    Political rents; Politicians’ wages; Local governments; D72; H1; H7;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H1 - Public Economics - - Structure and Scope of Government
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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