Public Employees as Politicians: Evidence from Close Elections

Ari Hyytinen, Jaakko Meriläinen, Tuukka Saarimaa, Otto Toivanen and Janne Tukiainen

No 78, Working Papers from VATT Institute for Economic Research

Abstract: We analyze the effect of municipal employees' political representation in municipal councils on local public spending. To quantify the effect, we use within-party, as-good-as random variation in close elections in the Finnish open-list proportional election system. One more councilor employed by the public sector increases spending by about one percent. The effect comes largely through the largest party and is specific to the employment sector of the municipal employees. The results are consistent with public employees having an information advantage over other politicians, and thus, being able to influence policy.

Keywords: Close elections, political representation, public employees, public expenditures, Local public economics, Kunnallistalous, Public services, Julkiset palvelut, Effectiveness of public services, Julkisten palvelujen vaikuttavuus, D720 - Economic Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior, H720 - State and Local Budget and Expenditures, C260 - Econometric Methods: Single Equation Models; Single Variables: Instrumental Variables (IV) Estimation, H750 - State and Local Government: Health; Education; Welfare; Public Pensions, (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cdm and nep-pol
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Citations: View citations in EconPapers (3)

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https://www.doria.fi/handle/10024/148736

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Journal Article: Public Employees as Politicians: Evidence from Close Elections (2018)
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