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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. Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Poutvaara, Panu & Takalo, Tuomas, 2004. "Candidate Quality," IZA Discussion Papers 1195, Institute for the Study of Labor (IZA).
  3. Persson, T. & Tabellini, G., 1998. "The Size and Scope of Government: Comparative Politics with Rational Politicians," Papers 658, Stockholm - International Economic Studies.
  4. Antonio Merlo & Andrea Mattozzi, 2005. "Political Careers or Career Politicians?," 2005 Meeting Papers 740, Society for Economic Dynamics.
  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. Gagliarducci, Stefano & Nannicini, Tommaso & Naticchioni, Paolo, 2008. "Outside Income and Moral Hazard: The Elusive Quest for Good Politicians," IZA Discussion Papers 3295, Institute for the Study of Labor (IZA).
  7. Gagliarducci, Stefano & Nannicini, Tommaso & Naticchioni, Paolo, 2008. "Electoral Rules and Politicians’ Behavior: A Micro Test," IZA Discussion Papers 3348, Institute for the Study of Labor (IZA).
  8. Mattozzi, Andrea & Merlo, Antonio, 2007. "Mediocracy," CEPR Discussion Papers 6163, C.E.P.R. Discussion Papers.
  9. Becker, Johannes & Peichl, Andreas & Rincke, Johannes, 2007. "Politicians' outside earnings and electoral competition," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 08-3, University of Cologne, FiFo Institute for Public Economics.
  10. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems And Public Spending," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 609-657, May.
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