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: www.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.