Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2018:5: Is It Worth It? On the Returns to Holding Political Office

Heléne Berg ()
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Heléne Berg: Dept. of Economics, Stockholm University, Postal: S-106 91 Stockholm, Sweden

Abstract: Despite the key role played by political payoffs in theory, very little is known empirically about the types of payoffs that motivate politicians. The purpose of this paper is to bring light into this. I estimate causal effects of being elected in a local election on monetary returns. The claim for causality, I argue, can be made thanks to a research design where the income of some candidate who just barely won a seat is compared to that of some other candidate who was close to winning a seat for the same party, but ultimately did not. This research design is made possible thanks to a comprehensive, detailed data set covering all Swedish politicians who have run for office in the period 1991–2006. I establish that monetary returns are absent both in the short and long run. Instead, politicians seem to be motivated by non-monetary returns, and I show that being elected locally once (for exogenous reasons) can be an effective starting point for enjoying such payoffs.

Keywords: Returns to politics; incumbency effects; regression discontinuity design

JEL-codes: C23; D72; J44

50 pages, December 4, 2018

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