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Money, Political Ambition, and the Career Decisions of Politicians, Second Version

Author

Listed:
  • Michael P. Keane

    () (Arizona State University)

  • Antonio Merlo

    () (Department of Economics, University of Pennsylvania)

Abstract

In this paper we assess the impact of a variety of policies that may influence the career decisions of members of the U.S. Congress, using the empirical framework of Diermeier, Keane and Merlo (2005). These policies alter incentives to run for re-election, run for higher office or leave Congress, by altering wages, non-pecuniary rewards and career prospects (both in and out of Congress). We find that reducing the relative wage of politicians would substantially reduce the duration of congressional careers. Notably, however, the effect varies considerably across different types of politicians. A reduction in the congressional wage would disproportionately induce exit from Congress by “skilled” politicians, Democrats, and politicians who were relatively young when first elected. Interestingly, however, it would not cause the type of politicians who most value legislative accomplishments (“achievers”) to disproportionately exit Congress. Thus, wage reductions would not reduce the “quality” composition of Congress in this sense. Term limits also have similar effects on achievers and non-achievers. However, we find that term limits would disproportionately induce members of the majority party to exit Congress. This has the interesting implication that term limits make it more difficult to sustain substantial congressional majorities over time. We do find three types of policies that disproportionately induce non-achievers to leave Congress: (i) elimination of seniority as a determinant of key committee assignments, (ii) restricting private sector employment after leaving Congress, and (iii) reducing the seniority advantage in elections.

Suggested Citation

  • Michael P. Keane & Antonio Merlo, 2007. "Money, Political Ambition, and the Career Decisions of Politicians, Second Version," PIER Working Paper Archive 10-009, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Feb 2010.
  • Handle: RePEc:pen:papers:10-009
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    File URL: http://economics.sas.upenn.edu/system/files/working-papers/10-009.pdf
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    Cited by:

    1. Carozzi, Felipe & Repetto, Luca, 2016. "Sending the pork home: Birth town bias in transfers to Italian municipalities," Journal of Public Economics, Elsevier, vol. 134(C), pages 42-52.
    2. Geys, Benny & Mause, Karsten, 2011. "Moonlighting politicians: A survey and research agenda," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2011-101, Social Science Research Center Berlin (WZB).
    3. Kaisa Kotakorpi & Panu Poutvaara & Marko Tervio, 2013. "Returns to office in national and local politics," Discussion Papers 86, Aboa Centre for Economics.
    4. BenYishay, Ariel & Betancourt, Roger, 2014. "Unbundling democracy: Political rights and civil liberties," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 552-568.
    5. repec:eee:pubeco:v:152:y:2017:i:c:p:47-54 is not listed on IDEAS
    6. Cerina, Fabio & Deidda, Luca G., 2017. "Rewards from public office and the selection of politicians by parties," European Journal of Political Economy, Elsevier, vol. 47(C), pages 1-18.
    7. 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.
    8. Karsten Mause, 2014. "Self-serving legislators? An analysis of the salary-setting institutions of 27 EU parliaments," Constitutional Political Economy, Springer, vol. 25(2), pages 154-176, June.
    9. Alexander Baturo & Slava Mikhaylov, 2016. "Blair disease? Business careers of the former democratic heads of state and government," Public Choice, Springer, vol. 166(3), pages 335-354, March.
    10. Thomas Braendle, 2015. "Does remuneration affect the discipline and the selection of politicians? Evidence from pay harmonization in the European Parliament," Public Choice, Springer, vol. 162(1), pages 1-24, January.

    More about this item

    Keywords

    politicians; political careers; monetary and non-monetary incentives; U.S. Congress;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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