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Returns to Office in National and Local Politics: A Bootstrap Method and Evidence from Finland

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  • Kaisa Kotakorpi
  • Panu Poutvaara
  • Marko Terviö

Abstract

We estimate the private returns to being elected to parliament or to a municipal council using a regression discontinuity (RD) design. We first present a bootstrap method for measuring the closeness of elections, which can be applied to any electoral system. We then apply the method to perform a RD estimation in Finland, where seats are assigned according to a proportional open-list system. Becoming a member of parliament increases annual earnings initially by about €20,000, and getting elected to a municipal council by about €1000. Subsequent earnings dynamics reveal that the returns to parliamentarians accrue mainly during the time in office, while the effect on later earnings is small. We also find a relatively weak individual incumbency advantage of 18 percentage points in parliamentary elections; the incumbency effect in municipal elections is negligible.

Suggested Citation

  • Kaisa Kotakorpi & Panu Poutvaara & Marko Terviö, 2017. "Returns to Office in National and Local Politics: A Bootstrap Method and Evidence from Finland," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(3), pages 413-442.
    • Handle: RePEc:oup:jleorg:v:33:y:2017:i:3:p:413-442.
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    File URL: http://hdl.handle.net/10.1093/jleorg/ewx010
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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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