Electoral Cycles in MPs' Salaries: Evidence from the German States

29 Pages Posted: 26 Sep 2016

See all articles by Bjoern Kauder

Bjoern Kauder

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Manuela Krause

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Niklas Potrafke

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: August 08, 2016

Abstract

Members of parliament (MPs) often decide on their own salaries. Voters dislike self-serving politicians, and politicians are keen to gratify their voters. In line with the political business cycle theories, politicians thus may well delay deciding on increases in salaries until after elections. We investigate electoral cycles in the salary increases of German state MPs. Using data for 15 states over the period 1980-2014, the results do not show that decisions on increases in MPs’ salaries were influenced by elections. In fact, MPs’ salaries increased by 0.30 to 0.37 percent when employees’ salaries increased by one percent. Politicians can increase their salaries at any point of time in the legislative period: understanding that all politicians benefit from an increase in salaries, voters may only be disenchanted with politics in general, without punishing individual incumbent parties.

Keywords: electoral cycles, political business cycles, election-motivated politicians, MPs’ salaries, rent extraction

JEL Classification: D720, H700, A130

Suggested Citation

Kauder, Bjoern and Krause, Manuela and Potrafke, Niklas, Electoral Cycles in MPs' Salaries: Evidence from the German States (August 08, 2016). CESifo Working Paper Series No. 6028, Available at SSRN: https://ssrn.com/abstract=2843470

Bjoern Kauder (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Manuela Krause

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Niklas Potrafke

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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