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

Author

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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," 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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    Cited by:

    1. Berg, Helene, 2018. "Politicians’ Payments in a Proportional Party System," Research Papers in Economics 2018:3, Stockholm University, Department of Economics.
    2. Paola Profeta & Eleanor Woodhouse, 2018. "Do Electoral Rules Matter for Female Representation?," CESifo Working Paper Series 7101, CESifo.
    3. Palguta, Ján, 2019. "Political representation and public contracting: Evidence from municipal legislatures," European Economic Review, Elsevier, vol. 118(C), pages 411-431.
    4. Frank, Marco & Stadelmann, David, 2021. "More federal legislators lead to more resources for their constituencies: Evidence from exogenous differences in seat allocations," Journal of Comparative Economics, Elsevier, vol. 49(1), pages 230-243.
    5. Jan Auerbach, 2018. "Office-Holding Premia and Representative Democracy," Discussion Papers 1802, University of Exeter, Department of Economics.
    6. Berg, Heléne, 2020. "Politicians’ payments in a proportional party system," European Economic Review, Elsevier, vol. 128(C).
    7. Lyytikäinen, Teemu & Tukiainen, Janne, 2019. "Are voters rational?," European Journal of Political Economy, Elsevier, vol. 59(C), pages 230-242.
    8. Jaakko Meriläinen, 2019. "Single‐Party Rule, Public Spending, and Political Rents: Evidence from Finnish Municipalities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(2), pages 736-762, April.
    9. Ari Hyytinen & Jaakko Meriläinen & Tuukka Saarimaa & Otto Toivanen & Janne Tukiainen, 2018. "When does regression discontinuity design work? Evidence from random election outcomes," Quantitative Economics, Econometric Society, vol. 9(2), pages 1019-1051, July.
    10. Bernt Bratsberg & Giovanni Facchini & Tommaso Frattini & Anna Cecilia Rosso, 2019. "Are Political and Economic Integration Interwinded?," Development Working Papers 454, Centro Studi Luca d'Agliano, University of Milano.
    11. Bose, Paul, 2021. "Political (self-)selection and competition: Evidence from U.S. Congressional elections," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242377, Verein für Socialpolitik / German Economic Association.
    12. Berg, Heléne, 2018. "Is It Worth It? On the Returns to Holding Political Office," Research Papers in Economics 2018:5, Stockholm University, Department of Economics.
    13. Carlsson, Magnus & Dahl, Gordon B. & Rooth, Dan-Olof, 2018. "Backlash in Attitudes after the Election of Extreme Political Parties," IZA Discussion Papers 11759, Institute of Labor Economics (IZA).
    14. Heléne Berg, 2018. "Is It Worth It? On the Returns to Holding Political Office," CESifo Working Paper Series 7406, CESifo.
    15. Berg, Heléne, 2020. "On the returns to holding political office (Is it worth it?)," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 840-865.
    16. Heléne Berg, 2018. "Politicians' Payments in a Proportional Party System," CESifo Working Paper Series 7278, CESifo.
    17. Fiva, Jon H. & Røhr, Helene Lie, 2018. "Climbing the ranks: incumbency effects in party-list systems," European Economic Review, Elsevier, vol. 101(C), pages 142-156.

    More about this item

    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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