DP10293 Returns to Office in National and Local Politics

Author(s): Kaisa Kotakorpi, Panu Poutvaara, Marko Terviö
Publication Date: December 2014
Keyword(s): political careers, regression discontinuity, returns to office
JEL(s): D72, J45
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10293

We apply a regression discontinuity design to estimate the returns to being elected to parliament or to a municipal council. We present a bootstrap approach for measuring electoral closeness in any electoral system, and apply it to the Finnish proportional open list system. Getting elected to parliament increases annual earnings initially by about ?20,000. The time profile of the earnings effect suggests that the returns accrue mainly during the time in office, while the effect on subsequent earnings is small. Getting elected to a municipal council increases subsequent annual earnings by about ?1,000.