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Outside income and moral hazard: the elusive quest for good politicians

Paolo Naticchioni (), Tommaso Nannicini () and Stefano Gagliarducci ()

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: In most modern democracies elected officials can work in the private sector while appointed in parliament. We show that when the political and market sectors are not mutually exclusive, a trade-off arises between the quality of elected officials and the effort they exert in political life. If high-ability citizens can keep earning money outside of parliament, they will be more likely to run for election; for the same reason, they will also be more likely to shirk once elected. These predictions are confronted with a unique dataset about members of the Italian Parliament from 1996 to 2006. The empirical evidence shows that bad but dedicated politicians come along with good but not fully committed politicians. There is in fact a non-negligible fraction of citizens with remarkably high pre-election income who are appointed in parliament. These citizens are those who gain relatively more from being elected in terms of outside income. Conversely, they are less committed to the parliamentary activity in many respects, like voting attendance and bills sponsorship.

Keywords: Politicians; Moral; hazard; Adverse; selection; Absenteeism; Outside; income (search for similar items in EconPapers)
JEL-codes: D72 J45 P16 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-cdm and nep-pol
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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Related works:
Working Paper: Outside Income and Moral Hazard: The Elusive Quest for Good Politicians (2008) Downloads
Working Paper: Outside Income and Moral Hazard: The Elusive Quest for Good Politicians (2007) Downloads
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