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Electoral Cycles in MPs' Salaries: Evidence from the German States

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  • Björn Kauder
  • Manuela Krause
  • Niklas Potrafke

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Abstract

Members of parliament (MPs) often decide on their own salaries. Voters dislike self-serving politicians, and politicians are keen to gratify their voters. In line with the political business cycle theories, politicians thus may well delay deciding on increases in salaries until after elections. We investigate electoral cycles in the salary increases of German state MPs. Using data for 15 states over the period 1980-2014, the results do not show that decisions on increases in MPs’ salaries were influenced by elections. In fact, MPs’ salaries increased by 0.30 to 0.37 percent when employees’ salaries increased by one percent. Politicians can increase their salaries at any point of time in the legislative period: understanding that all politicians benefit from an increase in salaries, voters may only be disenchanted with politics in general, without punishing individual incumbent parties.

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  • 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.
  • Handle: RePEc:ces:ceswps:_6028
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    1. repec:mhr:finarc:urn:sici:0015-2218(201706)73:2_213:mffeft_2.0.tx_2-2 is not listed on IDEAS
    2. Björn Kauder & Niklas Potrafke & Christoph Schinke, 2017. "Manipulating Fiscal Forecasts: Evidence from the German States," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 73(2), pages 213-236, June.
    3. Manuela Krause, 2019. "Communal fees and election cycles: Evidence from German municipalities," ifo Working Paper Series 293, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Kauder, Björn & Potrafke, Niklas & Reischmann, Markus, 2016. "Do politicians reward core supporters? Evidence from a discretionary grant program," European Journal of Political Economy, Elsevier, vol. 45(C), pages 39-56.
    5. repec:eee:poleco:v:52:y:2018:i:c:p:166-191 is not listed on IDEAS
    6. Björn Kauder & Manuela Krause & Niklas Potrafke, 2018. "Haben sich Landespolitiker ihre Diäten aus wahltaktischen Gründen lieber nach als vor den Wahlen erhöht?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(02), pages 21-24, February.

    More about this item

    Keywords

    electoral cycles; political business cycles; election-motivated politicians; MPs' salaries; rent extraction;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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