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Politicians' Outside Earnings and Political Competition

Author

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  • Becker, Johannes

    (University of Oxford)

  • Peichl, Andreas

    (Ludwig-Maximilians-Universität München)

  • Rincke, Johannes

    (University of Erlangen-Nuremberg)

Abstract

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.

Suggested Citation

  • Becker, Johannes & Peichl, Andreas & Rincke, Johannes, 2008. "Politicians' Outside Earnings and Political Competition," IZA Discussion Papers 3902, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3902
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    References listed on IDEAS

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    1. Mattozzi, Andrea & Merlo, Antonio, 2015. "Mediocracy," Journal of Public Economics, Elsevier, vol. 130(C), pages 32-44.
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    8. Stefano Gagliarducci & Tommaso Nannicini & Paolo Naticchioni, 2007. "Outside Income and Moral Hazard: The Elusive Quest for Good Politicians," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-164, Boston University - Department of Economics.
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    12. Mattozzi, Andrea & Merlo, Antonio, 2008. "Political careers or career politicians?," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 597-608, April.
    13. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems and Public Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 609-657.
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    Cited by:

    1. Kotakorpi, Kaisa & Poutvaara, Panu, 2011. "Pay for politicians and candidate selection: An empirical analysis," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 877-885, August.

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    More about this item

    Keywords

    outside earnings; political competition; political rents;
    All these keywords.

    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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