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Politicians' Outside Earnings and Political Competition

  • Becker, Johannes

    ()

    (University of Oxford)

  • Peichl, Andreas

    ()

    (ZEW Mannheim)

  • Rincke, Johannes

    ()

    (University of Erlangen-Nuremberg)

This paper deals with the impact of electoral competition on politicians' outside earnings. In our framework, politicians face a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The main hypothesis is that the amount of time spent on outside work is negatively related to the degree of electoral competition. We test this hypothesis using a new dataset on outside earnings of members of the German federal assembly. Taking into account the potential endogeneity of measures of political competition that depend on past election outcomes, we find that politicians facing low competition have substantially higher outside earnings.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3902.

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Length: 22 pages
Date of creation: Dec 2008
Date of revision:
Publication status: published in: Public Choice, 2009, 140 (3-4), 379 - 394
Handle: RePEc:iza:izadps:dp3902
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  1. Stefano Gagliarducci & Tommaso Nannicini & Paolo Naticchioni, 2007. "Electoral Rules And Politicians' Behavior: A Micro Test," Working Papers wp2007_0716, CEMFI.
  2. Andrea Mattozzi & Antonio Merlo, 2007. "Political Careers or Career Politicians?," NBER Working Papers 12921, National Bureau of Economic Research, Inc.
  3. Persson, Torsten & Tabellini, Guido, 1998. "The size and scope of government: Comparative politics with rational politicians," Seminar Papers 658, Stockholm University, Institute for International Economic Studies.
  4. Poutvaara, Panu & Takalo, Tuomas, 2007. "Candidate quality," Munich Reprints in Economics 19785, University of Munich, Department of Economics.
  5. Daniel Diermeier & Michael Keane & Antonio Merlo, 2004. "A Political Economy Model of Congressional Careers," Discussion Papers 1387, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Andrea Mattozzi & Antonio Merlo, 2006. "Mediocracy," PIER Working Paper Archive 07-007, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. Messner, Matthias & Polborn, Mattias K., 2004. "Paying politicians," Journal of Public Economics, Elsevier, vol. 88(12), pages 2423-2445, December.
    • Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  8. Johannes Becker & Andreas Peichl & Johannes Rincke, 2009. "Politicians’ outside earnings and electoral competition," Public Choice, Springer, vol. 140(3), pages 379-394, September.
  9. Stefano Gagliarducci & Tommaso Nannicini & Paolo Naticchioni, 2007. "Outside income and moral hazard : the elusive quest for good politicians," Economics Working Papers we073218, Universidad Carlos III, Departamento de Economía.
  10. Roberto Perotti & Massimo V. Rostagno & Gian-Maria Milesi-Ferretti, 2001. "Electoral System and Public Spending," IMF Working Papers 01/22, International Monetary Fund.
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